Fha Mortgage Loans

Written by Beth Hrusch
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FHA loans have been around since 1934, when the Federal Housing Administration was established in order to make home ownership possible for more people. This federal agency does not itself make loans; rather, it insures the mortgages that are made under FHA guidelines. An FHA loan is an attractive option for those who cannot make the minimum down payment percentage for a conventional home loan and who cannot afford large monthly payments.

FHA Loans Put Home Ownership Within Reach

Unlike conventional home loans, an FHA loan requires a down payment of only three percent of the purchase price. First-time home buyers in particular can benefit from this feature, as they do not have equity money from a previous home sale to put down on a home. Lenders dealing with FHA loans are also able to be more forgiving of past credit problems. FHA guidelines allow for even high-risk borrowers to get the mortgage insurance they need to secure an FHA loan.

Even loan fees and closing costs can be financed with an FHA loan. Also, there are limits to how much a lender can charge an FHA borrower. For example, the loan origination fee charged by the mortgage company may not exceed one percent of the total mortgage amount. Another thing to consider when looking at obtaining an FHA loan is the fact that the Federal government puts limits on the mortgage amount in order to prevent higher income people from using the program.

The FHA loan program is designed to help those with limited funds achieve the dream of home ownership. By making the lending process easy and affordable for borrowers, and limiting the risk to the lender, FHA brings both parties together in a mutually beneficial relationship. Thousands of families have benefited from the FHA program since its inception, and it continues to be a viable option for today's cash-strapped borrower.


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