As an approved FHA lender, we can provide all the information you need to understand what an FHA loan is, and evaluate whether it’s right for you.

What Is an FHA Loan?

The Federal Housing Administration (FHA) does not lend money. It provides insurance and tax on certain loans which meet its standards. The FHA was founded during the Depression with the objective of stimulating private lending for home construction and repair.

The FHA has helped many people to become homeowners. It has been less popular in eras when home values were rising or high because it imposed limits on the amount of the mortgage and required stringent appraisals. Recent modifications of FHA policy have made FHA loans more attractive. The FHA has increased loan limits, eased the appraisal process, and eliminated restrictions on closing costs. While the application process is still somewhat rigid, an FHA loan can potentially offer attractive financing.

What Characterizes an FHA Loan?

Keep in mind that the FHA does not actually make or guarantee loans. It simply ensures loans made by other lenders. So an FHA loan is simply a federally-backed mortgage loan from a private lender. Since this insurance lessens the risk of default which lenders face, lenders can accept lower down payments and/or interest rates.

The FHA insures all types of mortgage loans, including fixed-rate, adjustable-rate and purchase/rehabilitation.

FHA approved lenders are authorized to take FHA loan applications, process them, and underwrite and close the FHA loan.

Advantages of an FHA Loan

Because an FHA loan is ensured by the federal government, it can provide very competitive interest rates.
For the same reason, FHA loans can allow a down payment of only 3% of the home’s value. Also, the money can be a gift from a family member, employer or charitable organization.

Lenders generally make it easier to qualify for an FHA loan because they don’t face the risk of default.
This means that people with credit problems may find it easier to qualify for an FHA loan than for a conventional loan.The FHA offers many options to help you avoid foreclosure if you experience difficulty paying off the loan.

Who Should Consider an FHA Loan?

• First-time homebuyersPeople with little money to put down
• People who need to keep monthly payments as low as possible
• Those who fear they may not be able to qualify for a loan
• Those with less-than-perfect credit

If you fall into any of these categories, an FHA loan may be the right choice. Be sure to speak with our loan consultants for detailed information about how an FHA loan could meet your refinance needs.