FHA Loans

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Federal Housing Administration (FHA) loans are mortgage loans that are insured by the government, thereby reducing risk loss, for the FHA-approved lenders, in the event that the borrow defaults on the mortgage. The origin of the FHA loan goes back to the days of The Great Depression, after great economic instability was caused by many loan defaults and foreclosures. The FHA loan was established to help stimulate the housing market, and make loans and home ownership accessible to more people.

It is usually easy qualify for an FHA loan because it only requires a low down payment (3.5 percent) and it is not necessary to have perfect credit. In the case of a prospective buyer who cannot afford a down payment of 20 percent or cannot get approved for private mortgage insurance, an FHA loan may be the ideal solution. An FHA loan may be an assumable loan, meaning that if the home is sold, the new buyer may assume or acquire the loan that is on it.

Since FHA loans do not have the tight standards of conventional loans, two kinds of mortgage insurance premiums are required. One premium is paid in full up front or financed into the mortgage, the other paid in a monthly installment. FHA loans require that the purchased home meet certain conditions and that the home must be appraised by an FHA-approved appraiser.

If you are challenged by poor credit, bankruptcy problems, or have been through a foreclosure, an FHA loan may provide you with the opportunity to become a homeowner. Liberty Financial is a FHA-approved lender. Contact us today to discuss whether a FHA loan would be the right option for you.

FHA Loans Guide CTA