FHA Mortgage Rates
FHA Mortgage Rates
The Federal Housing Administration, generally known as "FHA", is the largest government insurer of mortgages in the world. A part of the United States Department of Housing and Urban Development (HUD), FHA provides mortgage insurance on single-family, multifamily, manufactured homes and hospital loans made by FHA approved lenders throughout the United States and its territories.
While borrowers must meet certain requirements established by FHA to qualify for the insurance, lenders bear less risk because FHA will pay the lender if a homeowner defaults on his or her loan. FHA has insured over 37 million home mortgages and 47,205 multifamily project mortgages since 1934. Currently, FHA has 5.2 million insured single-family mortgages and 13,000 insured multifamily projects in its portfolio. Clearly, FHA provides a huge economic boost to the country in the form of home and community development, particularly in today's challenging financial climate.
FHA History - FHA Loans
In 1965 the Department of Housing and Urban Development (HUD) was formed. Within HUD operates the Federal Housing Administration (FHA), which has the primary responsibility for administering the government home loan insurance program. This program allows a first time home buyer who might otherwise not qualify for a home loan to obtain one because the risk is removed from the lender by FHA who insures the loan for the lender.
The most popular FHA home loan program for a first time home buyer is by far is the 203(b). This is your standard fixed rate loan for 1-4 family owner occupied houses and only requires a minimum of 3% from the borrower. This loan also permits 100% of their money needed to close to be a gift from a relative, non-profit organization, or government agency.
FHA Advantage - FHA Loans
The main advantage to a FHA home loan is that the credit criteria for a first time borrower are not as strict as Conventional Loans sold to Fannie Mae (FNMA) or Freddie Mac (FHLMC). Someone who may have had a few credit problems or no traditional credit should not have a problem obtaining FHA financing. Also, FHA home loans are assumable, allowing a person to take over the mortgage without the additional cost of obtaining a new loan. In addition, the seller or lender must pay for part of the "traditional" closing costs (called non-allowable costs) while a borrower's allowable costs can partially be wrapped into the loan. The monthly mortgage insurance premium is cheaper for an FHA loan verses a conventional loan with 3% down. Finally, FHA loans may may require less income to qualify as they will exceed the Conventional debt ratios of 28/36% as their standard is 29/41%. To learn more about debt ratios, please see the income section.
Many people make the mistake and assume that FHA loans are only available for first time home buyers. This is not true. FHA loans are available to anyone, whether your first or fifth home and can be used to purchase a home or refinance a home. If refinancing a home the current loan DOES NOT have to be an FHA loan.
The greatest disadvantage of FHA home loans is that FHA limits the loan size that a borrower can borrower Please see the link for FHA Loan Limits in your area. Others may try and convince you that the FHA upfront mortgage insurance premium (MIP) is a disadvantage. However this amount makes just a very small increase in the borrower's month payment and is partially refundable in certain cases. See the section on MIP refunds for more information.
FHA Loans - Special Programs
FHA loan programs offer lower downpayments and are a good option for first-time homebuyers.
- Good Neighbor Next Door (formerly known as Teacher/Officer/Firefighter Next Door)
- Hurricane Evacuees discounted sales
- Homeownership for public housing residents
- Indian Home Loan Guarantee Program (Section 184)
Let's Compare Some Rates
Loans |
Auto |
Communicate |
|---|---|---|
| Mortgage Refinance | Auto Loans | GeniusRates Youtube |
| FHA Mortgages | Auto Warranty | GeniusRates Facebook |
| VA Mortgage | Insurance |
GeniusRates LinkedIn |
| Jumbo Loans | Insurance Rates | GeniusRates Email |
| Reverse Mortgage | Auto Insurance | Information |
| Home Equity Lines of Credit | Credit |
About Us |
| Home Improvement Loans | Credit Repair | FAQ |
| Debt Consolidation Loans | Credit Reports | Contact Us |
| Commerical Loans | Credit Cards | Advertise |
| Mortgage Loan Modification | ID Theft Protection | Sitemap |
