Advantages To FHA Loans

The Federal Housing Administration(FHA) provides mortgage insurance, backed by the U.S. government, on loans made by any qualified lender.

This protects them from loss if the homeowner should default on the mortgage loan throughout the United States and its territories.

FHA has now become the single largest insurer in the world, with over 34 million properties insured since 1934.   Ever since then, the FHA has continued to help low to medium income borrowers obtain the dream of owning a home.

Without this help, owning a home would not be an option for many borrowers over the last 70+ years. The FHA to this day retains those original principles helping 100's of thousands every year.

If your ready to take the step towards purchasing your own home, ask yourself these questions:

1. How much can I afford?
2. Do I have a steady source of verifiable income and have I been employed on a regular basis for the last 2-3 years?
3. Do I have a good record of paying my bills? These can include bills like rent and/or utilities that would not normally show up on a credit report.
4. Do I have few outstanding long-term debts, like car payments?
5. Do I have money or access to money(family, employer, etc.) for a down payment?
6. Do I have the ability to pay a mortgage every month, plus the additional costs associated with the mortgage - taxes, pmi and homeowners insurance?

If you can answer yes to all of them, chances are good you'll qualify for a FHA mortgage loan.

There are some big advantages for borrowers who qualify for FHA loans:

1. Guidelines that are less restrictive then conventional loans making it easier for those with credit issues such as bankruptcy to obtain a loan.
2. Down payments of 3%, with funds allowed to come from a family member, employer or charitable organization(this is not always the case with conventional loans).
3. Many closing cost may be added to the loan, keeping your out of pocket cost lower.
4. First-time homebuyers program.
5. FHA loans may be used for purchases, refinances and in some cases cash out refinances.
6. Fees charged by lenders are limited by FHA.  Example - the origination fee may not be more then 1 percent and the tax service fee is not allowed.

The current FHA mortgage limit ranges due to the Stimulus Package are $172,632 to $729,750. Click here to check your area.

Insurance premiums (mortgage insurance) charged by FHA are the main disadvantage with FHA loans.  You'll pay a onetime nonrecurring insurance premium fee of 1.75% at closing, this can however be added to your loan balance.

There is also a yearly 1.25% of balance insurance premium, this fee is divided by 12 and added to your monthly mortgage payment.

If you've ever had an FHA loan, it would be in your best interest to check with the US Department of Housing and Urban Development(HUD) to see if you are owed a refund, as millions go uncollected every year.

Click here for direct access to the (HUD) refund page.

For more information on FHA programs contact your local HUD office: