FHA loans: How they help you purchase a home
December 11th, 2014
| FHA Loans, Mortgage Options
Taking out an FHA loan? You have plenty of company. The Federal Housing Administration, also known as the “FHA,” is the largest insurer of mortgages in the world.
So how does the FHA work? And how does it help you buy a home?
The FHA, which is part of the U.S. Department of Housing and Urban Development, doesn’t actually provide home loans. It provides mortgage insurance on loans made by lenders throughout the United States and its territories. Since it was created in 1934, the FHA has insured more than 34 million properties. The insurance helps protect lenders against losses in the event homeowners default on their mortgage loans.
With FHA insurance, lenders are able to provide lower down payment loans with easier qualifying criteria than they otherwise would be able to offer. The insurance helps compensate for the higher risk of default on loans with lower down payment requirements and easier qualifying criteria. This allows families to purchase a home more easily and with less cash.
Once primarily a loan program for first-time home buyers, FHA today helps all kinds of home buyers and their families afford a home of their own. Want to learn more about the FHA? Here’s a short history of this popular loan program.