FHA Loans - Federally Insured Mortgage Loans

Home Loans for Lower Income Applicants

FHA loans are mortgage programs which are regulated and insured by the Federal Housing Administration in the United States.

FHA loans typically enable Americans with lower income to purchase a home that they ordinarily may not be able to get financing for. The FHA program was designed to offer financing companies insurance so they would be willing to lend to a "riskier" applicant.

The Purpose of FHA

Originally, the FHA's primary purpose was to insure loans granted by lending institutions. Since then, PMI (Private Mortgage Insurance) companies have become a key part to home lending, and FHA loans are now usually sought by people who can't afford a conventional home loan's down payment requirements or for some reason do not qualify for PMI.

Some main characteristics of FHA loans are:

It often allows you to buy a house with little or no down payment

It is a good option for first time buyers or other people with little cash in the bank

FHA does not loan money or purchase homes; it insures home loans granted by banks and lending institutions

Some basic factors which are considered when you apply for an FHA loan are:

Whether you have sufficient income to pay your mortgage payment

If you have a decent credit history

If the house you are looking at meets certain inspection guidelines

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Home Buying Vocabulary

Principal

The original blanace of money loaned excluding interest. Also the remaining balance of a loan excluding the interest.

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Frequently Asked Question

Why should I get pre-qualified before I begin house-shopping?

Answer:
It is a good plan to get pre-qualified for a mortgage in advance because it gives you advantages such as knowing how much you can spend and what your payments could be, as well as having more buying-power since a seller will see that you have the money ready and waiting, they will take your offer more seriously.

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