FHA Loans
FHA Loan:
The Federal Housing Administration was created in 1934 in an effort to bolster homes sales during the Depression. By financially guaranteeing loans, the FHA lifts much of the risk of non-payment and foreclosure from private lenders. It is important to remember that the FHA is not a lender; they just guarantee your loan.
Advantages:
Enables a borrower to purchase “more house”
Features:
.
Bankruptcy not an automatic disqualification
Lower interest rates
Down payment is less
Lower mortgage points and other closing cost requirements
Resale can be made more quickly
Is backed by the U.S. government
.
.
.
.
.
.
.
.
.
.
Down payment required
Higher upfront Mortgage Insurance Premium (MIP) than on conventional loans but monthly MIP is lower
Loan Limits are lower than conventional
MIP required regardless of the Loan-to-Value (LTV)