When it comes to the FHA home loan, the program is perhaps one of the more misunderstood home loan products available.
For many years the FHA home loan program is one that has been marketed to first time homebuyers, or those with less than stellar credit and down payment resources. However, the FHA home loan program is one that can be beneficial in today’s marketplace for many different types of homebuyers.
In this first article of a two part series, we will separate fact from fiction, when it comes to FHA loans.
Fiction: FHA Loans Are For First-Time Buyers Only
Fact: The FHA home loan program is not intended to or limited to first-time home buyers only. FHA loans can be used by first-time buyers and repeat buyers alike.
FHA home loans are often marketed as a loan program for first-time buyers because of their low down payment requirements and somewhat more limited credit standards than conventional home loans. However, for a potential home buyer who may have less than 20% to put as a down payment on a home or perhaps someone who is only a few years out from losing a previous property, the FHA home loan may make a lot of sense.
FHA home loans are for anyone looking to purchase a primary residence, regardless of whether or not you are first time homebuyer.
Fiction: FHA Home Loans Require A 20 Percent Down Payment
Fact: FHA home loans do not require a 20 percent down payment for the purchase of a new home. In fact, they only require a minimum 3.5% down payment for the purchase of a home. And in addition, that 3.5% down payment may even be a gift from a family member.
Couple this with the fact that FHA home loans have lower credit restrictions and standards than most other home loan programs and the FHA home loan program is one of the best fits for many potential home buyers.
Fiction: The FHA Provides FHA Mortgages As A Lender
Fact: Many people are led to believe that the FHA is a mortgage lender. That is not the case at all, as the FHA (Federal Housing Administration) insurances FHA home loans and does not provide them.
The Federal Housing Administration is a government agency that is a part of the U.S. Department of Housing and Urban Development. The FHA doesn't make home loans to home buyers or refinance home loans. Instead, the FHA provides the mortgage insurance to mortgage lenders, which allow FHA home loans to be possible.
With this setup, the FHA will reimburse a lender for a portion of incurred losses in the event that their FHA-insured loans default, or go to short sale or foreclosure.
Stay tuned next week, as we provide additional information about FHA loans and misconceptions about the FHA home loan program.
As always, if you are looking to be qualified for a new home loan for the purchase or refinance home loan, please speak with a licensed lender such as Strategic Mortgage, to fully and properly pre-qualify.
For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
Strategic Mortgage, LLC – AZBK#0909514 - NMLS#158804
Equal Housing Lender – Vasilios Kamboukos – NMLS#160440
Comments(0)