June 22, 2011
According to the official site at HUD.gov, the FHA loan program has been running since 1934. Designed to help Americans purchase affordable home loans, the FHA insured mortgage loan program features low down payment requirements, low closing costs and more forgiving credit requirements than conventional loans.
Many people turn to the FHA loan program because they may not be able to qualify for loans with good interest rates or terms as favorable as those offered by the FHA.
Some go directly to the FHA because they don’t feel their credit is good enough to qualify for a conventional mortgage. In many cases, an FHA loan is the best way to realize the dream of home ownership. But how does the FHA make that happen?
The FHA mortgage low down payment is an important part of the program–these loans require a down payment as low as 3.5% of the purchase price of the property. Another perk–closing costs and fees may be included in FHA loan financing depending on the terms of the loan, which must be worked out with your bank. But money down and closing costs are only part of the options offered.
FHA guaranteed mortgages for individuals are generally for single-family homes but can also be used on properties with up to four units as long as the buyer intends to live there, too.
There are also FHA insured loans for fixer-uppers. The terms of some FHA mortgages make it possible that the borrower may not have to pay for certain renovations out of pocket. If you qualify to do so, the cost of repairs, upgrades and remodeling can be included in the loan.
There’s even a program which allows home buyers to build in the cost of energy-efficient improvements to the home. (Under the terms of the FHA loan program, FHA mortgages can include the cost for adding these energy efficient improvements regardless of whether the home is a fixer-upper or not.)
FHA loans have advantages and benefits conventional loans may not offer, especially where down payment and closing costs are concerned. Consider your home loan options between conventional loans carefully before you commit–how does an FHA insured home loan measure up to its conventional counterpart?