FHA Mortgage

The FHA mortgage is an attractive option, especially for first-time homeowners because it is insured by the Federal Housing Administration (FHA). Primarily, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.Typically the borrower can be approved with 3.5% Down vs 20% that is required on other loan programs.

An FHA insured loan is a US mortgage insurance backed loan which is provided by an FHA-approved lender. FHA insured loans are federal program that have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford. To obtain mortgage insurance from the Federal Housing Administration, an upfront mortgage insurance premium (UFMIP) equal to 1.75 percent of the base loan amount at closing is required, and is normally financed into the total loan amount by the lender and paid to FHA on the borrower’s behalf. There is also a monthly mortgage insurance premium (MIP)  of .80% or .85%, depending upon the loan-to-value.

The program originated in 1934 during the Great Depression, when the rates of foreclosures and defaults rose sharply.  The program was intended to provide lenders with sufficient insurance to help ease economic turmoil.   Since 1934, the FHA has insured over 34 million home mortgages and over 47,000 multifamily project mortgages.  FHA currently has 4.8 million insured single family mortgages and over 13,000 insured multifamily projects in it’s portfolio.

FHA Loan Type Highlights:

Section 203(b)

  • Most common program, known as the standard FHA Mortgage
  • 1-4 unit properties are eligible
  • Just 3.5% down payment required
  • 100% of down payment may be gifted
  • Easier qualifying terms than conventional

 

Section 203(k)

  • FHA’s primary rehab/remodel program
  • Provides purchase money and additional  funds for improvements (additional funds held in escrow)
  • Available as a refinance option to finance repairs, remodels and upgrades
  • 1-4 unit properties allowed, including manufactured (please inquire for condos)
  • Cost of rehabilitation must cost at least $5,000
  • Streamlines and full 203K transactions permitted, please contact R.J. with specifics

Let the professionals at Innovative Mortgage Services provide you with the lowest rate FHA mortgage with exceptional service and fast closings.  When others say No, we say Yes.  Let our expanded guidelines and “makes sense” underwriting approach approve your loan request today.  For more information, call today!