What is a FHA Loan?

FHA loans are insured by the Federal Housing Administration up to 97% of the purchase price. The borrower has the benefits of easy credit qualifying, low closing costs, and low downpayments (only 3%). FHA loans can be used to purchase 1 - 4 unit properties and are being used for many first time home buyers in today's real estate market. FHA also allows borrowers to purchase fixer-upper homes and include all the cost of repairs into the loan. Or, if the borrower already owns a home and they wanted to repair or remodel, they would be able to refinance those costs as well as the remaining principal back into one loan.

FHA Home Loan Guarantee Program

• FHA guarantee's the lender
• Borrower downpayment as low as 3%
• Finance cost of repairs into the loan
• Purchase manufactured homes
• Finance cost of energy efficient repairs into loan

Mortgage centers and banks fund FHA loans. The Federal Housing Administration is a branch of the Department of Housing and Urban Development (HUD) and provides lenders with insurance for the borrower's loan. HUD and FHA are still offering low interest rates and great first time home buyer programs. In addition, HUD and FHA offer mortgage insurance for Veterans Association (VA) loans. A direct benefit to mortgage servicers like Fannie Mae and Freddie Mac is that even if the borrower defaults on the loan (stops making payments), the FHA will insure the note with equal monthly payments or the entire principal of the mortgage.