FHA Mortgage Loan

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Federal Housing Administration (FHA)

Federal Housing Administration (FHA) provides mortgage insurance on loans for single family or multifamily homes that have been made by FHA-approved lenders in the United States. The FHA was created in 1934 by the National Housing Act and has the ability to set standards made by banks or other private lenders for home building. Being the largest insurer of mortgages in the world, FHA is the only government agency that is funded by its self-generated income and does not require any cost from taxpayers. All the proceeds in the mortgage insurance are paid by homeowners and put into an account that allows the program to manage. The goal of FHA is to improve housing standards and conditions by providing an adequate home financing system through insurance of mortgage loans.

FHA Loan Types

  1. Section 203(b)
  • Flexible credit requirements
  • Largest of FHA’s single family programs
  • 1-4 unit properties are eligible
  • Down payments may be gift from specific sources
  • 5% down payment allowed
  1. Section 234(c)
  • In 2010, condominium complexes must be approved through HRAP/DELRAP to be eligible for FHA insurance
  • Provides mortgage insurance for individual; condominium units
  • Credit, down payment and limits of 203(b) apply
  1. Section 203(k)
  • 1-4 unit properties including condominiums are eligible; check with your lender for manufactured housing eligibility
  • Consultancy may be required
  • Primary program for property rehabilitation
  • Only 1 mortgage loan is used for both the acquisition and the renovation
  • Required improvements include cost effective energy conservation standards and smoke detectors
  • Encourage community and neighborhood revitalization
  1. HECM – Reverse Mortgages
  • Lump-sum, monthly payments, line of credit or a combination available
  • Allows access to equity in property with flexible terms
  • Limited to homeowners 62 of age and older
  • FHA was the first to promote reverse mortgages nationally

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