September 12, 2011
The FHA loan program has helped first-time home buyers and other house hunters since it started in 1934.
FHA insured loans are designed to help people get affordable home loans featuring low down payment requirements and affordable closing costs. The program is designed with credit requirements far more lenient than many conventional home loan programs on the market today.
Some borrowers turn to FHA-insured loans because they discover the down payments, interest rates and other terms on conventional mortgages ask too much or are too restrictive. Some borrowers worry their credit score or history isn’t good enough to get the most competitive rates.
In these cases, FHA mortgages are definitely worth a look and can be a means to home ownership for borrowers who might not qualify for a conventional mortgage or can’t provide the higher down payments those loans often demand. What does an FHA mortgage offer the typical first time home buyer?
A low down payment is one of the most attractive offerings. While at the time of this writing, only VA home loans offer a zero-down-payment option for qualified veteran borrowers, an FHA home loan does offer one of the lowest down payment arrangements on the market. The required money down on an FHA insured mortgage can be as low as 3.5% of the purchase price of the home. Closing costs and fees may be rolled into the loan, depending on the arrangement made with the lender.
FHA guaranteed mortgages are for single-family homes but can also be used on properties with up to four units as long as the buyer intends to live in one of those units–something known as the occupancy rule.
Another attractive option of FHA loans? They aren’t just for homes that are in great condition–you can also get a type of FHA mortgage designed for those who want fixer-upper properties. These loans allow the borrower to do the renovations or upgrades without having to pay for the renovations out of pocket–qualified borrowers can include the cost of repairs, upgrades and remodeling into the loan.
A related program allows home buyers to build in the cost of energy-efficient improvements to the home. An FHA mortgage can include the cost for adding these energy efficient improvements regardless of whether the home is a fixer-upper or not.
You will also find an FHA guaranteed loan for mobile homes, manufactured homes, and the lots these homes are placed upon. The FHA offers terms on two different programs; one is for those purchasing a mobile home intended to be placed on a plot of land the borrower already owns and one for those who want to rent space in a mobile home park.
When you compare FHA loans with their conventional alternatives, it’s easy to see what advantages an FHA mortgage has over conventional loan terms, especially where down payment and closing costs are concerned. Are you considering your options between conventional loans? Consider the benefits of applying for an FHA loan–you can pre-qualify for an FHA mortgage at www.fhaloan.com or get more information on FHA mortgages from the FHA official site: www.fha.gov
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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