FHA house loans, insured by the Federal Housing Administration, are government-assisted alternatives to conventional financing originally offered by FHA lenders to first-time home buyers with poor credit. FHA loans are now available to a broader audience and are popular refinance alternatives for homeowners, including an FHA streamline refinance, and an FHA cash-out refinance.
What exactly is an FHA loan?
In 1934, Congress established FHA loans to increase homeownership options and assist low-income borrowers in obtaining a mortgage. FHA mortgages are federally insured mortgages guaranteed by the Federal Housing Administration.
FHA loans make it possible for aspiring homeowners without requiring a substantial down payment. This flexible and more affordable lending arrangement, which allows borrowers to make down payments of as little as 3.5 percent, is a popular alternative for first-time homeowners.
This form of loan not only allows for a lower down payment but also has less stringent credit score standards, making it suitable for borrowers with little cash saved up and those with less-than-excellent credit who cannot qualify for a conventional loan. Understanding that the FHA does not lend money for these mortgages is vital. Borrowers obtain a loan from an FHA-approved lender, and the FHA only insures that loan.
What are the FHA loan property requirements?
To obtain an FHA loan to purchase a home, the property must meet the minimum property criteria established by the Department of Housing and Urban Development. FHA loans are available for a wide range of FHA-approved properties, including:
- Houses with 1-4 units
- Condominiums and townhouses
- Homes that are mobile, manufactured, or modular
Do you need assistance evaluating whether your home is eligible for an FHA loan? Our lending officers provide free mortgage consultations and quotations.