FHA LOANS

FHA loans are insured by the Federal Housing Administration, which is part of the Department of Housing and Urban Development (HUD).

FHA loans are ideal for low to moderate income borrowers, those with small down payments, and for those who might have problems getting a mortgage with a commercial lender. For example, if you don't have perfect credit, an FHA loan may be your best bet.

FHA loans offer many advantages. The interest rates on FHA loans are very competitive, because the loans are insured by the Federal government. Also, FHA loans require smaller down payments--as little as 3%. And, unlike loans issued by commercial lenders, the down payment can come from a family member or other person as a gift. FHA loans also allow you to make additional payments each month if you wish, and have no pre-payement penalty.

The FHA doesn't actually doesn't actually issue your mortgage. Instead, you look for a mortgage lender who is FHA-approved, and apply through that lender. As always, it pays to shop around for the best rates and terms.

FHA loans can be used to purchase or refinance new or existing homes. The homes can be new or existing, and can be one family up to four-family homes, condominiums, or even manufactured or mobile homes.

FHA loan programs cover fixed rate mortgages of ten, fifteen, twenty, twenty-five, or thirty year terms, as well as adjustable rate mortgages.

FHA loans also are available for fixer-uppers. If there's a home you'd like to buy that needs a lot of work, the FHA has a program called the SF Rehabilitation Loan program (a 203K program). With this type of FHA loan, you take out a mortgage for the purchase price of the home, as well as the costs for the repairs. The amount of money you can borrow for the mortgage is based upon the projected value of the home when the repairs are complete. The advantage of this type of FHA loan is that you only have to borrow once to finance the home as well as the rebuilding.

The FHA also has a program for home improvement loans.

Because there are so many different mortgage plans available today, it's best that you consult with several lenders before deciding on one plan. While FHA loans are attractive, you may find that another mortgage plan will save you even more money.