The loans provided under the aegis of Federal Housing Administration (FHA) provide necessary insurance to the lending institute against non-payment or default committed by the individual undertaking the home loan. The FHA works under Housing and Urban development of the US federal government. The history of the FHA loans goes back to early 1930s when the economy was going through a major recession and this led to defaults by the borrowers which the lending institutes had to take on their books. Hence FHA was set up to provide necessary insurance to the lending institutes. Besides this objective, FHA has been able to provide to big boost to affordable housing industry in the US by providing an alternate route to low income individuals who cannot afford to go to a Private Mortgage Insurance (PMI). Please remember that FHA is not an agency which provides any kind of loan to an individual or grants loans at a subsidized rate of interest. They would merely insure the loan that you have availed from an authorized FHA lender. In addition to low income profile, set of people who can look forward to help from FHA are individuals who cannot afford a big down payment and those who have undergone a financial crisis in the form of a bankruptcy in the past.
If you are looking for an FHA loan, you must approach FHA authorized lenders. Not all the lending institutes are FHA approved and it is essential to narrow down to the ones which are on the FHA approved list. There are experts available with all FHA approved lending institutes who specialize in giving you necessary advice and information about FHA Loans. The applicants of FHA loan would undergo a credit analysis and review process similar to the one carried out under for applicants under the conventional category. Let us look at the important characteristics of FHA Loans.
o FHA loans are especially positioned for first time home buyers since they come with the facility of a low down payment. They encourage low income group to purchase their own homes since FHA loans involves a significantly lower down payment compared to normal home loans.
o FHA Loans would consider the administrative and processing charges of a home loan to calculate the amount of FHA loan that an individual would be eligible for.
o FHA Loans help you save on significant interest costs towards servicing of home loans since these are cheaper to conventional loans. Hence your monthly outgo towards interest on home loan is reduced and you are comfortable managing and servicing he loan.
o The lending institutes are more than happy to process and disburse loans since they are backed by the guarantee of FHA.
o An FHA Loan is your best bet in case you do not have a good credit score.
o FHA Loans are not only available for a home purchase but also towards renovation and home improvement
Just walk in to the nearest office of an authorized FHA lender to fulfill your housing dream. With FHA to help you, your home is a much closer to reality than you think.