Monday, February 1, 2010

What is the FHA?


The FHA (Federal Housing Administration) is an agency within HUD (Housing and Urban Development--a cabinet of the United States), and was established in 1934 to advance opportunities for Americans to own homes. By providing private lenders with mortgage insurance, the FHA gives them the security they need to lend to first-time buyers who might not be able to qualify for conventional loans. The FHA has helped more than 26 million Americans buy a home.

The FHA does not require perfect credit or a high-paying job to qualify for a loan, and also makes loans more accessible by requiring smaller down payments than conventional loans. No tax dollars are used to fund the program. Lender claims paid by the FHA mortgage insurance program are drawn from the Mutual Mortgage Insurance fund. This fund is made up of premiums paid by FHA-insured loan borrowers.

To apply for an FHA-insured loan, you must meet the credit requirements, be able to afford the mortgage payments and the cash investment, and plans to use the property as a primary residence.

If you are interested in an an FHA loan, you can apply via mail, telephone, the Internet, or video conference. There is no minimum income requirement. But you must prove steady income for at least three years, and demonstrate that you've consistently paid your bills on time.

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