The Department of Housing & Urban Development (HUD) is a federal agency responsible for national policy as well as programs that address the United States housing needs. The Federal Housing Authority (FHA) is a part of HUD and FHA plays a dominant role in supporting homeownership. They do this by underwriting homeownership for lower-moderate-income consumers. Additionally, FHA provides assistance to first-time buyers as well as others who may not be able to meet down payment requirements for conventional loan programs by providing mortgage insurance to private lenders. Everyone who has reasonable credit records, has enough cash to close the loan, and has enough steady income to make monthly mortgage loan payments can be approved for an FHA-insured mortgage. In order to obtain an FHA-insured loan, consumers need to apply to a HUD-approved lender.
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The FHA-insured mortgage loans are available in urban as well as rural locations for single-family homes, for 2-unit, 3-unit, and 4-unit properties, as well as condominiums. Down payments can be as low as 3%. Closing costs can be packaged into the loan. FHA interest rates are typically market rates, while down payment requirements are lower than for conventional mortgages.
FHA loans may not exceed the statutory limit. Consumers may go to this website to obtain FHA mortgage limits: https://entp.hud.gov/idapp/html/hicostlook.cfm.
About FHA Mortgages and Recent News, News History, if applicable
Consumers may have some questions not covered so far and some of those will be addressed in this section. For instance:
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What Type of Programs does FHA Offer?
• Section 203(b) – This is the most commonly used FHA program. Consumers can use the program to purchase a new OR existing one- to four-family home and that includes manufactured homes as well. Program is available for urban/rural locations. A 203(b) fixed mortgage loan can be paid back in monthly installments over 10, 15, 20, 25, or 30 years.
• Section 234(c) – This program provides mortgage insurance for purchasers who desire to buy a unit in a condo project. The condo can consist of more than one building (like townhouses, a group of row apartments, high-rises, or any combination thereof). HUD must approve any condo project.
• Section 237 – In some cases, HUD may insure loans under this Section for those consumers who have had credit problems and who cannot meet the standard credit requirements to purchase low-cost homes.
• Section 203(k) – FHA also insures Home Improvement loans. These mortgages allow consumers to either purchase or refinance and rehabilitate a home that is at least one year old. A portion of the loan proceeds are utilized to pay off one’s existing mortgage and the remainder of funds are placed in escrow and then released as rehabilitation is completed. Improvements financed with this type of mortgage proceeds must comply with HUD’s “Minimum Property Standards” as well as all local codes.
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