FHA loan programs: FHA Access, FHA Cal Gold, FHA Rural Gold, FHA Mutal Mtg. Insurance, FHA 203 (k), FHA 203 b, FHA 251, FHA Title I program, FHA MIP Refund

The Federal housing administration was created by Congress in 1934 as part of the national housing act. The purpose of the act, and of the FHA, was to generate new jobs through increased construction activity, to exert a stabilizing influence on the mortgage market, and to promote the financing, prepared, and sale of real estate

nationwide. Today, the FHA is part of the Department of Housing and Urban Development (HUD).

The FHA's primary function is to insure loans. FHA approved lenders are insured against losses caused by borrower default.

The FHA insurance program is called mutual mortgage insurance plan (MMI). Under the plan, lenders who had been approved by the FHA to make insured loans either submit applications from prospective borrowers to the local FHA office for approval, or, if authorized by the FH to do so, from the underwriting functions themselves. Lenders who are authorized by the FHA to fully underwrite their own FHA loan applications are called direct endorsement lenders (DE Lenders). A direct endorsement lender is responsible for the entire mortgage process, from application for closing. When a direct endorsement lender has approved and closed a loan, the application for mortgage insurance is submitted to the FHA.

As the insurer, the FHA incurs full liability for losses resulting from default and property foreclosure. In turn, the FHA regulates many of the terms and conditions of the loan. FHA regulations have the force and effect of law.

FHA loan features.

Any loan intended for submission for FHA insurance has a number of features that distinguish it from a conventional loan. The most significant of these features are:

1. Less stringent quality standards. FHA will allow re-establishment of a credit within two years after a discharge of bankruptcy, when any judgments have been fully paid, any tax liens have been repaid, or a repayment plan has been established by the IRS, and within three years after a foreclosure has been resolved.

2. Low down payment. The 3% cash down payment is generally less than for a similar conventional loan.

3. No secondary financing is allowed for the down payment. The FHA minimum down payment for a loan must be paid by the borrower in cash. The borrower is not allowed to resort to secondary financing from the seller or from any lender to make up any part of the down payment. The FHA permits the use of either a nom- repayable gift of money, credit from a portion of rents from pay rent/purchase contract between a buyer and seller, or some home repairs made by the purchaser (sweat equity) to be used to satisfy the 3% down payment costs.

4. Some closing costs may cover the down payment. While a borrower may not finance any of the closing costs along with the sales price, FHA permits the use of some closing cost to satisfy the 3% down payment requirement.

5. FHA mortgage insurance is required for the loan regardless of the amount of the down payment.

6. No prevent penalties are allowed. FHA loan may be paid off in full at any time with no additional charges. A lender is allowed to require that any such payment be made on a regular installment due date.

7. The property must be owner occupied. The FHA used to insure investor properties but they have virtually eliminated all such programs. Two-to-four unit properties qualify if they are owner occupied.

Other characteristics of FHA loans.

The typical FHA loan has a 30 year term. However, FHA offers long terms as short as 15 years. They also offer adjustable loans and home repair loans. The rate is fully negotiable between the borrower and lender. They still tend to be lower than college loan rates because the lenders risk is lessened by the FHA mortgage insurance.

A lender may only charge 1% ordination of the own FHA loan, but is allowed to charge discount points. Typically, discount points allow a lender to recover and the interest loss upfront. Although discount points may be paid by the buyer in an FHA transaction, they are almost always paid by the seller.

The lender is required to obtain an appraisal of the property from an FHA approved appraiser. The a praise it will note any health and safety deficiencies and necessary repairs needed on a validation conditions form. The lender is required to provide the buyer with a home-buyer summary of all the deficiencies noted by the appraiser. All problems with health and safety conditions, as well as necessary repairs, must be completed before the FHA will issue insurance on the property.

Income qualifications and a maximum amounts .

There is no minimum income requirement for an FHA loan. Borrowers of the show two years of steady employment and demonstrate that they have consistently paid their bills on time. The FHA has a ratio of 29% and 41%. This means that a payment for a home loan may not exceed 29% of the borrower's gross monthly income and all installment debt, including the home loan payment, may not exceed 41%.

The FHA sets maximum mortgage loan amounts. These amounts, which vary by state as well as location within a state, are adjusted yearly. FHA loan limits are found on HUD website. more...

What is FHA- FHA Home Loan Information - Buying A Home With Help From The Government

The federal government wants to help you buy a home. They see it as a way to improve the economy, provide a stable tax base, and help grow communities. To encourage homeownership, the federal government backs loans for those who might have trouble qualifying for a conventional loan.

Loans For Low To Moderate Income Buyers

The Federal Housing Administration (FHA), an agency of the Department of Housing and Urban Development (HUD), provides several mortgage loan programs for low to moderate income home buyers. FHA loans offer market rates with a lower down payment requirement.

FHA loans require a minimum down payment of 3%, cash to close the loan, and an acceptable credit score. Closing costs can be part of the loan amount, and credit score requirements vary with programs.

To apply for a FHA loan, you must submit an application with a HUD approved lender. Most traditional lenders already are approved by HUD.

Loans For Veterans

Loans guaranteed by the Department of Veterans Affairs (VA) are available to most veterans and service persons. Usually these types of loans do not require a down payment and have more favorable loan terms. VA loans do not have a maximum amount, but lenders typically limit the loan amount to $359,650, the conforming rate.

To apply for this type of loan, you must be qualified by the VA. Once they approve your application and verify your qualifications, they will issue you a certificate which you present to a traditional mortgage lender as part of your application paperwork.

Loans For Rural Residents

The Department of Agriculture also backs loans through its Rural Housing Service (RHS). RHS loans require no down payments, but you must be able to afford monthly mortgage payments and have an acceptable credit history.

RHS also offers direct loans to low income family, those with income 80% or less than the areas average income and cannot get credit from financing companies. These mortgage loans can be extended to 38 years and require no down payment.

Apply For Government Assistance

Government mortgage loan programs enable you to avoid mortgage insurance and secure financing to buy a home. These programs are offered through traditional lenders, which can easily be found online. more...

What is FHA- Do You Speak Real Estate?

Anyone interested in real estate should be able to talk the talk. Here is a list of common phrases and words with ashort explanation. Use it as a reference:

Adjustable Rate Mortgage (ARM). A type of mortgage loan whose interest rate changes periodically up or down, usually once or twice a year. They are tied to an interest rate index like 11th District Cost of Funds.

Annual Percentage Rate (APR). Everything financed in your mortgage loan package (interest, loan fees, points or other charges) expressed as a percentage of the loan amount (usually slightly above the actual interest rate alone).

Assumable Loan. A loan in which the lender is willing to "transfer" from the previous owner of the home to the new owner, sometimes at the same interest rate, sometimes at a new rate. An assumable loan can make your home more attractive to buyers when you want to sell. Often thenew buyer has to qualify for the assumption just as he/shewould for a new loan.

Closing Costs. Costs the buyer must pay at the time of closing in addition to the down payment: including points, mortgage insurance premium, homeowners insurance, prepayments for property taxes, etc. Closing costs average 3% to 4% of the loan amount.

Contingency. A condition put on an offer to buy a home; such as the prospective buyer making an offer contingent on his or her successful sale of a present home.

Conventional Mortgage. A type of mortgage not insured by either the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), and thus usually requiring a 10% to 20% down payment.

Earnest Money. Funds submitted with an offer to show "good faith" to follow through with the purchase. Earnest money is placed by the buyer into an escrow/trust account until closing, when it becomes part of the down payment or closing costs.

Escrow. A procedure in which documents or transfers of cash and property are put in the care of a qualified third party, other than the buyer or seller.

FHA Financing. Financing for a loan which will be insured against loss by the Federal Housing Administration. Such financing allows for a lower down payment than required by most lenders.

Homeowners Insurance. Insurance that protects the homeowner from casualty (losses or damage to the home or personal property) and from liability (damages to other people or property). Required by the lender and usually included in the monthly mortgage payment.

Loan Origination Fee. A fee charged by the lender for evaluating, preparing, and submitting a proposed mortgage loan.

Mortgage Insurance Premium (MIP). A charge paid by the borrower (usually as part of the closing costs) to obtain financing, especially when making a down payment of less than 20 percent of the purchase price, for example on an FHA-insured loan.

Point. An amount equal to one percent of the principal amount being borrowed. The lender may charge the borrower several points in order to provide the loan.

Property Taxes. Taxes (based on the assessed value of the home) paid by the homeowner for community services such as schools, public works, and other costs of local government. Paid as a part of the monthly mortgage payment.

Title Insurance. Protects lenders and homeowners against loss of their interest in property due to legal defects in the title.

VA Loan. A loan guaranteed by the Department of Veterans Affairs against loss to the lender, and made through a private lender. more...

To see more articles about FHA

Meanwile visit the mortgage web site for information about real estate, mortgages, first time home buying and mortgage refinannce.

Refinancing in order to liquidate your equity can be done in one of two ways. You can get one loan to pay off your existing mortgage, with enough cash back to accommodate whatever other financial needs you had in mind.