FHA Mortgage Rates & Loans

The demise of the conventional and alternative mortgage industry have brought FHA mortgage loans back into the spotlight. FHA mortgages are loans that are insured by the Federal Housing Administration (FHA) which is a division of HUD, a division of the government known as Housing and Urban Development.

FHA mortgage loans are not offered directly by HUD, but rather by mortgage lenders, brokers and banks that are approved to finance loans that are underwritten according to the guidelines that FHA has established. FHA mortgages require mortgage insurance, a portion is paid up front and another portion is paid with each house payment. The mortgage insurance amount will be different if you apply for a 15 or 30 year loan term.

The FHA plays a critical role in allowing both current home owners and new home owners to apply for mortgage loans that would not be approved under traditional underwriting guidelines. Some of the unique characteristics of FHA loans include:

• The ability to finance up to 97% of the homes value on a refinance or purchase loan
• Loans that are not based on a borrowers credit score
• The ability to refinance out of a chapter 13 bankruptcy
• The ability to have a gift for a homes entire down payment
• Non occupied co borrower
• Fixed mortgage insurance premiums
• Interest rates that are fixed or variable

FHA mortgage loans are always underwritten according to specific FHA loan guidelines. Mortgage lenders and banks must order home appraisals from FHA certified home appraisers. FHA appraisals require that the property meets certain guidelines such as a working furnace, structurally sound roof, and no potentially hazardous deficiencies such as cracked sidewalks, missing handrails, etc. A borrower must be able to fully document their income over a two year period and should be prepared to document their assets and may be required to document an additional two months work of assets to cover their upcoming house payment as reserves.

If you are considering applying for a FHA mortgage then you should shop for the best possible mortgage terms and closely look at the interest rate and closing fees.