Mortgage Advice
Mortgages

Understanding Mortgages: What are FHA Loans?

(07/19/2012) In the midst of one of the most uncertain real estate markets in history, it’s more important than ever to be informed. In a continuing series, we take a look at some of the most pressing questions about mortgages, refinancing, home equity, and other real estate options available to you.

For many potential buyers looking to take advantage of a highly affordable housing market, FHA loans offer an important alternative to traditional home loans.

Overall, FHA loans are mortgages obtained with the assistance of the Federal Housing Administration (FHA). The FHA insures these loans against default. Lenders can feel more confident lending to certain people with this insurance - if the borrower cannot pay off the loan, the FHA eats the costs instead of the lender.

Typically, FHA loans can be obtained at lower down payments, meaning those borrowers who can afford a home but don’t have a lot of available cash can still buy. Under FHA loans, borrowers can put down as little as 3.5%. In contrast, typical conventional loans require at least 5%, and sometimes won’t lend for less than 20%.

For the ability to put down a smaller down payment and appear more attractive to lenders, the FHA does charge a fee. Borrowers will pay an upfront mortgage insurance premium of at least 1% of the total home price. An additional fee will be charged with each monthly payment.

FHA loans are often a good choice for first-time homebuyers. But no matter if the buyer is experienced or new, FHA loans are also good for those with less money for down payments and closing costs, have decent credit (a score of at least 580), meet certain debt-to-income ratios, want to keep their monthly payments low, and are looking for a home within the price limits set up by the FHA, which can vary by region.

FHA loans can also be obtained for a variety of properties, including single-family homes, duplexes, triplexes, four-unit residential buildings, condos, and mobile homes.


For Additional Reading:

FHA Loans: Frequently Asked Questions: http://www.fha.com/faq.cfm

7 Things to Know About a FHA Loan: http://www.bankrate.com/finance/real-estate/7-things-to-know-about-an-fha-loan.aspx/


 

 

 

 

 

 

 

 

Follow the link to continue reading the related articles.

Understanding Mortgages: What is Closing?

Understanding Mortgages: What is Pre-Approval?

Understanding Mortgages: What is Foreclosure?

Understanding Mortgages: What is a Short Sale?

Understanding Mortgages: What is Private Mortgage Insurance?

Understanding Mortgages: What is Escrow?

Understanding Mortgages: Mortgage Terms

Understanding Mortgages: Types of Mortgages

 

 

 

 

 

 

 

 

 

 

 

 

Fannie Mae & Jumbo Mortgage Rates

Just One Click! = Current Rate Chart

Pennsylvania Mortgage Rates Current Mortgage Rates - Hawaii Current Mortgage Rates - Alaska West Virginia Mortgage Rates Virginia Mortgage Rates District of Columbia Mortgage Rates Maryland Mortgage Rates Delaware Mortgage Rates New Jersey Mortgage Rates Connecticut Mortgage Rates Rhode Island Mortgage Rates Massachusetts Mortgage Rates New Hampshire Mortgage Rates Vermont Mortgage Rates New Hampshire Mortgage Rates Maine Current Mortgage Rates Vermont Mortgage Rates Current Mortgage Rates - New York Current Mortgage Rates - Michigan Current Interest Rates - Wisconsin Current Mortgage Rates - MINNESOTA Ohio Mortgage Rates Current Mortgage Rates - Kentucky Current Mortgage Rates - Indiana Illinois - Current Mortgage Rates Current Mortgage Rates - Iowa Missouri Mortgage Rates Current Mortgage Rates - North Carolina South Carolina Mortgage Rates Current Mortgage Rates - Florida Current Mortgage Rates - Georgia Current Mortgage Rates - Tennessee Current Mortgage Rates - Alabama Current Mortgage Rates - Mississippi Current Mortgage Rates - Louisiana Current Mortgage Rates - Arkansas Current Mortgage Rates - Oklahoma Current Mortgage Rates - TEXAS Current Mortgage Rates - New Mexico Current Mortgage Rates - Arizona Current Mortgage Rates - Kansas Current Mortgage Rates - Nebraska Current Mortgage Rates - Colorado Current Mortgage Rates - Wyoming South Dakota Mortgage Rates Current Mortgage Rates - North Dakota Current Rates - Montana Idaho Current Rates Washington Mortgage Rates Current Mortgage Rates - Oregon Current Mortgage Rates - Utah Current Mortgage Rates - Nevada Current Mortgage Rates - California

Start by selecting your state





iPad for Mortgage Rates

Real Estate Market News

Refinancing: Selecting a Loan

Moving Ahead With Your Refinance