GoVisits Web Directory » News Articles » Loan Information » Federal Housing Administration (FHA)

Federal Housing Administration (FHA)

FHA loan programs:

FHA Access

FHA Cal Gold

FHA Rural Gold

FHA Mutal Mtg. Insurance

FHA 203 (k)

FHA 203 b

FHA 251

FHA Title I program

FHA MIP Refund

The Federal housing administration was created by Congress in 1934 as part of the national housing act. The purpose of the act, and of the FHA, was to generate new jobs through increased construction activity, to exert a stabilizing influence on the mortgage market, and to promote the financing, prepared, and sale of real estate

nationwide. Today, the FHA is part of the Department of Housing and Urban Development (HUD).

The FHA's primary function is to insure loans. FHA approved lenders are insured against losses caused by borrower default.

The FHA insurance program is called mutual mortgage insurance plan (MMI). Under the plan, lenders who had been approved by the FHA to make insured loans either submit applications from prospective borrowers to the local FHA office for approval, or, if authorized by the FH to do so, from the underwriting functions themselves. Lenders who are authorized by the FHA to fully underwrite their own FHA loan applications are called direct endorsement lenders (DE Lenders). A direct endorsement lender is responsible for the entire mortgage process, from application for closing. When a direct endorsement lender has approved and closed a loan, the application for mortgage insurance is submitted to the FHA.

As the insurer, the FHA incurs full liability for losses resulting from default and property foreclosure. In turn, the FHA regulates many of the terms and conditions of the loan. FHA regulations have the force and effect of law.

FHA loan features.

Any loan intended for submission for FHA insurance has a number of features that distinguish it from a conventional loan. The most significant of these features are:

1. Less stringent quality standards. FHA will allow re-establishment of a credit within two years after a discharge of bankruptcy, when any judgments have been fully paid, any tax liens have been repaid, or a repayment plan has been established by the IRS, and within three years after a foreclosure has been resolved.

2. Low down payment. The 3% cash down payment is generally less than for a similar conventional loan.

3. No secondary financing is allowed for the down payment. The FHA minimum down payment for a loan must be paid by the borrower in cash. The borrower is not allowed to resort to secondary financing from the seller or from any lender to make up any part of the down payment. The FHA permits the use of either a nom- repayable gift of money, credit from a portion of rents from pay rent/purchase contract between a buyer and seller, or some home repairs made by the purchaser (sweat equity) to be used to satisfy the 3% down payment costs.

4. Some closing costs may cover the down payment. While a borrower may not finance any of the closing costs along with the sales price, FHA permits the use of some closing cost to satisfy the 3% down payment requirement.

5. FHA mortgage insurance is required for the loan regardless of the amount of the down payment.

6. No prevent penalties are allowed. FHA loan may be paid off in full at any time with no additional charges. A lender is allowed to require that any such payment be made on a regular installment due date.

7. The property must be owner occupied. The FHA used to insure investor properties but they have virtually eliminated all such programs. Two-to-four unit properties qualify if they are owner occupied.

Other characteristics of FHA loans.

The typical FHA loan has a 30 year term. However, FHA offers long terms as short as 15 years. They also offer adjustable loans and home repair loans. The rate is fully negotiable between the borrower and lender. They still tend to be lower than college loan rates because the lenders risk is lessened by the FHA mortgage insurance.

A lender may only charge 1% ordination of the own FHA loan, but is allowed to charge discount points. Typically, discount points allow a lender to recover and the interest loss upfront. Although discount points may be paid by the buyer in an FHA transaction, they are almost always paid by the seller.

The lender is required to obtain an appraisal of the property from an FHA approved appraiser. The a praise it will note any health and safety deficiencies and necessary repairs needed on a validation conditions form. The lender is required to provide the buyer with a home-buyer summary of all the deficiencies noted by the appraiser. All problems with health and safety conditions, as well as necessary repairs, must be completed before the FHA will issue insurance on the property.

Income qualifications and a maximum amounts .

There is no minimum income requirement for an FHA loan. Borrowers of the show two years of steady employment and demonstrate that they have consistently paid their bills on time. The FHA has a ratio of 29% and 41%. This means that a payment for a home loan may not exceed 29% of the borrower's gross monthly income and all installment debt, including the home loan payment, may not exceed 41%.

The FHA sets maximum mortgage loan amounts. These amounts, which vary by state as well as location within a state, are adjusted yearly. FHA loan limits are found on HUD website.


Loan articles

  1. Bridging Loans - Fulfilling Financial Shortfall between Real Estate Transactions

    You are trying to buy a new property and selling the current one to raise money for the new purchase. It is usually difficult corresponding sale of one property with the buying of another. This almost always leads to financial gap. For this particula... more to this article

    Article category: Loan Information

  2. How To Easily Find A Military Loan

    Military members the price for serving your country and defending freedom is difficult, fortunately finding the right loan to fit your situation doesn't have to be when you know where to look. Finding a loan provider that understands the pressures an... more to this article

    Article category: Loan Information

  3. Holiday Personal Loans ? When the Traveller Within You Wants to Break Free

    If you are a traveller by heart then perhaps every holiday you wait for a chance to fly away somewhere around the world. The world is full of so many cultures and colours. It has trapped within its wings such an expansive variety; it has so much to o... more to this article

    Article category: Loan Information

  4. Fast Cash Now Easier Than Ever, but at a Price?

    Because of the Internet, quick payday loans are faster than ever before. Quick payday loans will really get you out of a fix, because quick payday loans arrive the next day, right at your doorstep, in amounts ranging from five hundred dollars to thre... more to this article

    Article category: Loan Information

  5. Why Choose an Unsecured Loan?

    Why choose an unsecured loan? An unsecured loan can be used for almost anything - a relaxing holiday, a new car, a wedding, debt consolidation or home improvements. These are just some of the reasons why people choose an unsecured loan.If you ... more to this article

    Article category: Loan Information

Federal Housing Administration FHA information

Article categories

Payday Loans: How They Really Work!

Payday loan companies gives the borrower the amount of th...

Loan Information

What are Home Improvement Loans?

Home improvement loans are loans specifically designed by lo...

Loan Information

Business Loans from Family - A Good Idea?

Can I Ask my Family for a Loan to Pay Off my Debts?...

Loan Information

Long Term Unsecured Loan?

In order to understand qualifications for loan approval, let...

Loan Information

What You Should Know About Home Equity Loans

A home equity loan is essentially a type of second mortgage....

Loan Information

A Guide to Finding Cheap Loans

Finding cheap loans isn't always easy? it seems like every t...

Loan Information

Information About Debt Consolidation Loans with Bad Credit

Finding debt consolidation loans with bad credit can be quit...

Loan Information

Getting the Best Auto Loan Rates

Getting a good auto loan rate is not luck, but rather a skil...

Loan Information

Facts You Should Know About Types of Loans

When you set out to borrow, you often come across terms like...

Loan Information

Locating Cheap Personal Loans

Locating the cheap personal loans that you're looking for is...

Loan Information

Guide to Personal Secured Loans

Here is a useful guide to personal secured loans. A personal...

Loan Information

Government Loans for Beginners

Government loans are those that the government of a country ...

Loan Information

Alternative Ways to Avoid Payday Loan

If you spend more than you earn on a regular basis, it is a ...

Loan Information

Finding the Right Bad Credit Loan UK

If you live in the United Kingdom and find yourself in need ...

Loan Information

No Credit Check Payday Cash Advance Loan - Benefits to Using a Payday Loan

No Credit Check Payday Cash Advance Loan - Benefits to Us...

Loan Information