What Is an FHA Loan, and Why Would You Want One?
The FHA mortgage program was created to make home ownership accessible to more people, and is administered by the US Department of Housing and Urban Development (HUD). FHA does not actually lend money; it reimburses FHA lenders when borrowers default on FHA home loans. This reduces the lenders’ risk, which makes them more willing to loan money, and keeps borrowers’ costs down. FHA mortgage lenders offer a variety of home loans designed to meet many needs, including:
Mortgages to purchase single-family homes, condominiums and 1- to 4-unit multifamily homes (203(b) loans)
Mortgages to rehabilitate or improve a home that you already own, or one that you plan to buy (203(k) mortgages)
Refinance mortgages, whether or not your current loan is with FHA
Reverse mortgages, called Home Equity Conversion Mortgages or HECM
FHA mortgages are especially well-suited to meet the needs of borrowers who need to finance more than 80 percent of their home’s purchase price or appraised value. They carry advantages and drawbacks that you should be aware of before you decide that an FHA mortgage is right for you. For more information on whether or not an FHA loan is right for you, contact me today.