What does FHA home loan mean? What does FHA stand for.
FHA LOAN-Easy Qualification for refinancing and a low down payment when buying a home.
In 1934 Congress established the Federal Housing Administration (FHA) as part of the National Housing Act of 1934. This legislation was designed to invigorate homeownership and extend home owners with refinance possibilities not possible during the great depression. The FHA became a part of the Department of Housing and Urban Development (HUD) in 1965. This is the reason "FHA" and "HUD" is used interchangeably. When the FHA was established, the real estate industry was flat on its back. Over 2 million construction workers were out of work. Home buyers found the loan terms impossible to meet. The minimum down payment requirement was 50%. The repayment schedule was spread over 3 to 5 years and ending with a balloon payment. Just 4 in 10 families owned homes. The FHA does not lend directly to prospective home buyers and home owners, but works with FHA approved banks and mortgage brokers to offer FHA home loans. The Federal Housing Administration insures banks against loss in the event of home foreclosure.
How to Buy a home with an FHA loan.
1- The FHA makes it easier to qualify for a mortgage: Since the FHA insures your home loan, mortgage companies are more inclined to offer you loan terms that make it less challenging for you to qualify.
2. Lower credit scores with FHA mortgages: You are not required to have a perfect credit score to obtain an FHA home loan. Believe it or not . . . even if you had credit problems, such as a bankruptcy, you'll find that it's easier for you to qualify for an FHA home loan than a conventional loan.
3. Low Down Payment: FHA home loans have a low 3.5% down payment and that money can come from an employer, family member, or even a charitable organization as a gift.
4. Costs Less: FHA loans have competitive interest rates because the Federal government insures the loans. The Federal Housing Administration does not provide direct financing to the home buyer, nor does the FHA set the interest rates on the mortgage loans it insures. For the lowest interest rate on a home loan, you should compare mortgage lenders. An FHA insured mortgage may be used to purchase or refinance a new or existing one to four unit family home, a condominium unit or a manufactured housing unit (as long as the manufactured home is positioned on a permanent foundation).
FHA Home loan Questions.
Do I have to be a first time home buyer to be eligible for an FHA loan? - No
is there a maximum purchase price for FHA loan?
No, just a maximum mortgage amount
Is there a maximum FHA loan amount?
Yes! Most US counties have a maximum FHA loan limit of $271,050 for a single family home or "approved" FHA condominium. FHA loan limits are higher for duplexes, triplexes and 4 unit buildings. For a single family home at the $271,050 limit means that the sales price without additional down payment is
$280,880.83. The minimum down payment is 3 1/2%.
What is the minimum FHA down payment
The minimum down payment on a 30 and 15 year FHA home loans is 3 1/2%.
Can the seller pay closing costs with an FHA loan?
Yes, but there is a limitation
Can I finance my closing costs with an FHA loan?
No, but the FHA funding fee can be financed
How long does FHA loan take to close?
FHA home loans do not take any longer to close than any other mortgage. Generally, 30 to 45 days.