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FHA Comeback
With all of the recent problems in the subprime market, there will be more attention paid to one of the best home loan programs out there - FHA. In my opinion, the FHA home loan program is ideal for first time home buyers or borrowers with a less than perfect credit.
The Federal Housing Administration (FHA), a wholly owned government corporation, was established under the National Housing Act of 1934 to improve housing standards and conditions. Its goal is to provide an adequate home financing system through insurance of mortgages, and to stabilize the mortgage market. For decades, FHA was the best program for low to middle income borrowers until the age of subprime loans became the rage with the no-money-down and interest-only options.
Here is a chart to show you the explosion in subprime originations and the steady decline of FHA loan production. Keep in mind that most of the subprime loans carry much higher rates than FHA loans. The subprime loans were aggressively marketed and provided the quick, easy fix for borrowers who did not want to wait until their credit was ready for FHA.
Here are a few of the advantages of the FHA program:
- only 3% down which can be ... more

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