FHA insured loans are incredibly popular for many reasons. Backed by the Federal Housing Administration, these mortgage & refinance options are available exclusively from FHA backed lenders. Since they are designed more for first time home buyers than investors, FHA loans require owner-occupancy for at least one year.
FHA loans are often good options for those with steady income but not a lot in savings for a down payment.
Since FHA loans are riskier for a lender, they require PMI (private mortgage insurance) until the loan is paid
Due to guarantee the FHA puts on FHA insured loans, borrowers generally receive low interest rates for their mortgage.
The FHA, or The Federal Housing Administration, was created in 1934 by President Franklin Delano Roosevelt, through the passing of the National Housing Act. As America was recovering from The Great Depression, President Roosevelt wanted to ensure another similar event never happened again, and the FHA was one of the many tools he devised in order to help Americans become and stay homeowners. Both the FHA and their parent department, the Department for Housing and Urban Development, or HUD, is housed at the Robert C. Weaver Federal Building in Washington D.C.
It's important to understand that the FHA, or the government in any capacity, is not loaning you the money to buy or refinance your house with a FHA insured loan. With an FHA Insured Loan, the Federal Housing Administration is putting a guarantee behind you, telling the lender that if you happen to default on your mortgage, they will receive their principal back from them. This government backing is why the requirements for an FHA loan are often less than other loan types, although individual requirements do vary by lender and on a case by case basis. You could almost think of it as the government co-signing for your home; wouldn't you be a lot more likely to lend someone 20 bucks if Uncle Sam guaranteed you'd get your money back either way?
While conventional, USDA, VA and other loan programs may be better suited for some people depending on their situation, FHA insured loans have historically, and still to this day, help Americans who could not otherwise afford to purchase a home the opportunity to become homeowners, and there is a reason we are proud to work with so many FHA backed lending institutions. If you want to know more about if a FHA backed loan is right for you and your family, please contact us anytime.
If there's one thing that is true in the world of finance, it's that things are constantly changing. If you're looking for more information about the various FHA loan programs currently available or the FHA guidelines for those options, your best bet is to talk to someone whose job it is to keep up on these sorts of things. However, below you will find basic information on some of the more popular mortgage loan programs the FHA backs.
ADJUSTABLE RATE MORTGAGES (ARM)
Fixed rate mortgages have an interest rate that remains the same for the life of the loan, while the interest rate on an ARM will change throughout. Initially, the interest rate of an ARM is lower than a fixed rate mortgage, making an ARM a good option for many planning to own their home only for a few years.
BASIC HOME MORTGAGE LOAN 203(B)
This loan provides mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. A borrower must beet standard FHA qualifications and is eligible for approximately 96.5% financing. The borrower will also be responsible for paying an annual premium.
Learn more about buying a home at our home purchase website, CFCMortgageLoan.com.
MORTGAGE INSURANCE FOR DISASTER VICTIMS SECTION 203(H)
Through Section 203(h), the Federal Government helps victims in Presidentially designated disaster areas recover by making it easier for them to get mortgages and become homeowners or re-establish themselves as homeowners. Americans are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary. Similar to the basic FHA mortgage insurance program it resembles (Section 203(b) Mortgage Insurance for One to Four Family Homes), Section 203(h) offers features that make recovery from a disaster easier for homeowners. Anyone whose home has been destroyed or severely damaged in a Presidentially declared disaster area is eligible to apply for mortgage insurance under this program.
HOME EQUITY CONVERSION MORTGAGES FOR SENIORS
Reverse mortgages are increasing in popularity with seniors who have equity in their homes and want to supplement their income. Available exclusively from FHA backed lenders, the HECM is FHA's reverse mortgage program that enables homeowners to withdraw a portion of their home's equity. The amount available for withdrawal varies on a case by case basis and depends on a number of factors.
Learn more about refinances at our refinance site, CFCRefinance.com.
In business for over 20 years, Coastal Funding Corporation is known for our determination to acquire as many lending partners as possible. We understand not every loan program fits every person, and on top of that, every lender has their own specific requirements, meaning the more options we have at our disposal to match you up with, the more likely you are to find not just a loan, but the right loan.
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