FHA Loans
Federal Housing Administration's Mission

The Federal Housing Administration was started in 1934 as part of the new deal. The FHA's goals have remained the same through out the years and they are to contribute to building and preserving healthy neighborhoods and communities, maintain and expand homeownership, and to stabilize credit markets in times of economic disruption.

Details of an FHA Home Loan

The FHA now offers a variety of loan programs to a large population and FHA mortgages can have fixed or adjustable interest rates. Many find these home loans attractive because they require very small down payments, gifts can be used for down payments and closing costs, and because the FHA regulates the closing costs. These loans also have qualifications that are easier to meet than traditional mortgages. The FHA does not require a minimum FICO score to meet qualifications and these programs will allow home purchase two years after a bankruptcy filing.

Energy Efficient Mortgages

Energy Efficient Mortgages, EEMs, recognize that reduced utility expenses can permit a homeowner to pay a higher mortgage to cover the cost of the energy improvements on top of the approved mortgage. FHA EEMs provide mortgage insurance for a person to purchase or refinance a principal residence and incorporate the cost of energy-efficient improvements into the mortgage. The borrower does not have to qualify for the additional money and does not make a down payment on it. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, or savings and loan association, and the mortgage is insured by HUD. FHA insures loans. FHA does not provide loans.

Rehabilitation Mortgage Insurance (203K)

Section 203(k) insurance enables home buyers and homeowners to finance both, the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage - or to finance the rehabilitation of their existing home. FHA approved lending institutions which include many banks, savings and loan associations, and mortgage companies can make loans covered by Section 203(k) insurance.

Reverse Mortgages

Reverse mortgages are becoming popular in America. Reverse mortgages are a special type of home loan that lets a home owner convert the equity in his/her home into cash. They can give older Americans greater financial security to supplement social security, meet unexpected medical expenses, make home improvements, and more.

FHA Refinance Requirements

FHA has permitted streamline refinances on insured mortgages since the early 1980's. The "streamline" refers only to the amount of documentation and underwriting that needs to be performed by the lender, and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline refinance are:

* The mortgage to be refinanced must already be FHA insured.
* The mortgage to be refinanced should be current (not delinquent).
* The refinance is to result in a lowering of the borrower's monthly principal and interest payments.
* No cash may be taken out on mortgages refinanced using the streamline refinance process.

FHA Loan Down Payment Grants

The Ameridream program offers gift funds up to 10% of the home's purchase price which do not have to be paid back. Buyers must agree however, to return any funds that are not used toward down payments or closing costs and to return the funds if the sale of the home does not close on the scheduled closing date.

The Nehemiah program is a Private California Non-Profit Organization that offers down payment assistance programs to qualified first time and repeat homebuyers. This programs offers free gift funds to be used toward down payments and closing costs for homes purchased through eligible FHA loan programs.

The Housing Action Resource Trust (HART) Program is a 501c(3) non-profit Housing and Community Development corporation that helps potential homebuyers purchase homes by offering down payment assistance programs to those with low and moderate incomes.

Depending on the seller's contribution toward a home purchase, Consumer Debt Solution, Inc. (CDS) can gift up to $10,000 of the final sales price of a home. Since all the money awarded is in the form of gift funds, it does not have to be paid back.

The Partners in Charity (PIC) is a non-profit corporation that offers financial assistance through programs for qualified low and moderate income homebuyers. Down payment and closing cost assistance is provided as gift funds from 2% to 10% of the home price.