The Federal Housing Administration (FHA) has been helping people become homeowners since 1934. The organization has insured more than 40 million home mortgages since its inception. Today it continues to help families reach the "American dream" of homeownership, by making it easier to obtain mortgages.
FHA is a federal government agency (a division of HUD) that offsets the risk a lender takes by insuring these loans originated by lenders (also approved under the guidelines this government agency provides), to protect the lender in case the borrower defaults on the loan. The FHA insures the loan, so lenders are typically able to pass on better pricing and mortgage rates. Again.....The FHA, like the VA, does not lend money. It provides government backing and insurance in the event that the borrower defaults on the loan.
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, mortgages for manufactured homes, and mortgages to rehabilitate or improve a home that you already own, or one that you plan to buy. 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. Loan amounts are available to the FHA High Balance limits per MSA. Click Here to see California County limits.
Loans can be fixed-rate or adjustable-rate mortgages, but the majority of loans are fixed-rate mortgages, according to the FHA. If you are a first-time homebuyer, your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Gift funds for the down payment are also acceptable as are seller contributions.
In addition, there are some FHA loan programs available for specific niches such as "Good Neighbor Next Door", targeted to Law Enforcement Officers, Teachers (preK-12th), Firefighters and Emergency Responders (EMT's) to purchase and live in certain communities. The "Energy Efficient Mortgage" helps homebuyers or homeowners save money on utility bills by enabling them to finance the cost of energy efficient features to new or existing housing as part of their FHA insured home purchase or refinance. Section "203(k) mortgage insurance program" enables homeowners and homebuyers to finance both the purchase (or refinance) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home.
If you already have a house and you would like to fix it up you can refinance what you owe and add the cost of repairs - all in one loan. If you are also 62 years or older the FHA reverse mortgage might be helpful because it lets you convert a portion of equity into cash. Inquire today!