An FHA loan is a government insured loan that was instituted to assist buyers with minimal cash to purchase a home and first time buyers. An FHA loan is a great way to go about buying a home because there are flexible financing guidelines for first time buyers, including minimal down payments, and access to fixed rate programs. Another advantage of an FHA loan is that they start at lower-than-market interest rates, and carry fewer costs than conventional mortgages.
Available to all buyers, FHA loan programs are designed to help creditworthy low-income and moderate-income families who do not meet requirements for conventional loans. With the recent turmoil resulting from sky rocketing adjustable rate mortgages (ARMs) many people are looking for a way to refinance from their current adjustable rate mortgage to a fixed rate mortgage. For a large number of individuals, refinancing may be the only way to not lose their homes. FHA offers 30 year fixed rates to 95 percent, making the deal more favorable than the adjustable, prime based HELOCs. Refinancing your existing mortgage could mean substantial savings for you. Refinancing a FHA loan mortgage also brings eligibility for a cash-out refinance.
To target the program to entry-level home buyers, FHA loans have limits on the principal amount (each county has a loan limit based on typical local prices). FHA loans have traditionally required a much lower down payment than conventional loans, making them particularly appealing to first-time home buyers. In addition, the down payment can be a gift from a friend or family member. One of the required stipulations of an FHA loan is that to qualify the home buyer must to use it as their primary residence. The FHA can also help home buyers finance their closing costs, and even offers mortgage insurance. Theyre great for the first time home buyer.
An FHA loan is a home mortgage that allows for a purchase or refinance with a low down payment. An FHA loan is designed to help those who would otherwise not be able to afford a down payment on a home, and also for those who do not qualify for other types of mortgages.