FHA Mortgages

FHA mortgages are insured by the Federal Housing Administration, an agency within the U.S. Department of Housing and Urban Development (HUD). FHA does not loan money, but it provides lenders protection through mortgage insurance (MIP) in case the borrower defaults on his or her loan obligations. Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans. The are also programs, that you may have heard about, that are designed to help those in certain situations, such as FHA Secure.

If you are considering buying a home or refinancing and will be borrowing more than 90% of the purchase price or value of the home, right now an FHA loan is hard to beat. With the losses that the private mortgage insurance or "PMI" companies have been taking over the last year from all the foreclosures, they have been forced to increase their rates to get the required PMI. That's where FHA steps in to save the day. Since FHA loans are insured by the government and not private insurance companies, the "MIP" or mortgage insurance premium, has stayed the same. Which on a $150,000 mortgage can save you at least $50 dollars a month and possibly as much as $150 a month. That's huge!

The FHA loan of today is much different than in the past.

A lot of the restrictions that made FHA loans somewhat overbearing before, have for the most part, been eliminated. The seller is no longer required to pay certain costs, which used to cause sellers to shy away from buyers that were doing FHA financing. The traditional FHA inspection has been done away with and only the FHA appraisal is needed.

Some of the benefits of FHA financing:

• Part of the closing costs can be financed.
• Lower monthly mortgage insurance premiums and, under certain conditions, automatic cancelation of the premium.
• More flexible underwriting criteria than conventional loans
• FHA limits the amount lenders can charge for some closing cost fees (e.g. the origination fee can be no more than 1% of mortgage).
• Loans are assumable to qualified buyers with certain restrictions.

FHA 203K

This is an FHA construction loan that can be done to build or rehab a home. Only a few lenders are still doing them. We will provide more details soon.