The Federal Housing Administration is an agency of the federal government. The FHA insures private loans issued for new and existing housing.. The FHA was created by Congress in 1934, and in 1965 became part of the Department of Housing and Urban Development's Office of Housing. The FHA's mission is offering help borrowers get the amounts they qualify for, and to assist lenders by reducing the risk of issuing loans
A mortgage loan from a lender that is insured by the Federal Housing Administration has been considered the magic pill for buyers who cannot meet regular qualifying criteria. Because the loan is guaranteed by the Government, buyers are allowed a lower down payment and can borrow more than would normally be allowed on their income. In addition, the F.H.A. interest rates are usually below private market levels.
Here are some of the new changes.
- The new rules have lifted the ceiling on loan amounts in the program to $417,000. This allows more expensive loans to be purchased with in FHA loan.
- Now, instead of a 3% down payment, one only needs 1.5% of the home purchase price as a down payment.
A few points to remember is they still look at income to debt ratio and decent credit scores.
FHA loans are fixed rate loans so will not start with a teaser rate and then jump up in a few years.
Hopefully this will make it easier for the first time homebuyer to get a loan.
Broker/ Owner Four Sail Realty