Government Building

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:

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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

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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)