The Federal Housing Administration or FHA is a federal agency established as part of the National Housing Act of 1934. Its goal is to improve the housing standards and conditions of every Americans. FHA provides a sufficient home financing system. The agency does this by insuring mortgage loans to help stabilize the mortgage market.
In short, the FHA is your key to homeownership. You can get different types of mortgage loans offered by the Federal Housing Administration. They are the following:
Fixed-Rate mortgages Adjustable-Rate mortgages Energy Efficient mortgages Graduated Payment mortgages Growing Equity mortgages
You need to meet certain requirements such as employment and credit scores to qualify for any of these mortgages. There are limits imposed on FHA loans offered to homebuyers. These limits will help you purchase a home during tough economic times and strict lending standards prevent you from qualifying for conventional loans.
Last year, the Housing and Economic Recovery Act of 2008 signed by President Bush made some changes to FHA loan limits to help more homebuyers qualify. For example, FHA loan limits on single-family home mortgages will be raised to $271,050 in low-cost areas and $625,500 in high-cost areas. The previous FHA loan limit was $362,790.
The new limits, according to the Housing and Urban Development secretary, is targeted at assisting neophyte homebuyers and those struggling with money to refinance to government-backed loans such as FHA loans. One of the most beneficial things FHA does is that it allows you to refinance or buy a home with a low down payment. This spells great for first-time homebuyers and those who dont have much money for initial payment. Other than that, FHA-insured loans have more benefits than the conventional loan. They have lower down payment, which is at 3 percent. In addition, it can come anybody”family members or organizations as a gift.
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