It’s easy to understand why many people looking for a new home are turning to FHA insured loan programs. Because FHA Loans are insured by the Federal Housing Administration home buyers have an easier time qualifying for a mortgage. Those who typically benefit most by an FHA loan are first-time home buyers and those who have less than perfect credit.
Details of an FHA Home Loan
The FHA now offers a variety of loan programs to a large population and FHA mortgages can have fixed or adjustable interest rates. Many find these home loans attractive because they require very small down payments, gifts can be used for down payments and closing costs, and because the FHA regulates the closing costs. These loans also have qualifications that are easier to meet than traditional mortgages. The FHA does not require a minimum FICO score to meet qualifications and these programs will allow home purchase two years after a bankruptcy filing.
Energy Efficient Mortgages
Energy Efficient Mortgages, EEMs, recognize that reduced utility expenses can permit a homeowner to pay a higher mortgage to cover the cost of the energy improvements on top of the approved mortgage. FHA EEMs provide mortgage insurance for a person to purchase or refinance a principal residence and incorporate the cost of energy-efficient improvements into the mortgage. The borrower does not have to qualify for the additional money and does not make a down payment on it. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, or savings and loan association, and the mortgage is insured by HUD. FHA insures loans. FHA does not provide loans.
Rehabilitation Mortgage Insurance (203K)
Section 203(k) insurance enables home buyers and homeowners to finance both, the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage – or to finance the rehabilitation of their existing home. FHA approved lending institutions which include many banks, savings and loan associations, and mortgage companies can make loans covered by Section 203(k) insurance.