FHA: Federal Housing Administration

From LoveToKnow Mortgage

Established in 1934 as part of President Franklin D. Roosevelt’s New Deal, the Federal Housing Admission, or FHA as it is more commonly known, was created to help get the country’s citizens back on their feet.

The FHA provides federal mortgage assistance to qualified homebuyers.

History of the Federal Housing Administration

With the United States mired in the Great Depression, times were difficult for almost everyone in the country. The future was uncertain and affordable housing was simply not available. To combat the problem, the Federal Housing Administration was created.

The original goal of the FHA was to provide a stable mortgage market for American families who dreamed of home ownership. The FHA would also provide the funds needed to construct low-income housing, something that was desperately needed.

Because the plan was working so well, the FHA soon became part of the Department of Housing and Urban Development. This allowed even more Americans to have access to affordable housing. In fact, since its inception, the FHA has grown to become the world’s single largest insurer of home mortgages.

FHA Programs

The Federal Housing Administration has begun several different reach-out programs to benefit communities. Two that deserve special notation are:

  • SNAP or Safe Neighborhood Action Plan: This community program provides education, after school programs, and assistance in an effort to eliminate drug abuse and crime in urban areas.
  • HECM or Home Equity Conversion Mortgage: With this HUD program, homeowners who are over 62 years of age can remain in their homes by utilizing their home's equity.

Federal Housing Administration Loans

Over the years, FHA mortgages have made owning a home possible for many Americans. Without the FHA, many people would not be able to afford or qualify for a mortgage.

If you are interested in owning your own home, FHA loans are worth checking into. Here are some of the basic mortgage guidelines established by the Federal Housing Administration:

  • Lending Limits: Lending limits vary based on the type of housing and the county and state in which the housing is located.
  • Mortgage Insurance: To protect lenders against losses and defaults, mortgage insurance is required.
  • Closing Costs: Each local FHA office determines the specific fees that are allowable to be charged to the borrower.
  • Debt to Income Ratios: In an effort to protect borrowers against purchasing a mortgage that is not affordable, new debt to income ratio guidelines have been established. To learn more about these guidelines, visit FHA.com.
  • Credit History: To be eligible for a mortgage, you must demonstrate good credit history.

In addition to offering mortgage loans for home purchases, the FHA also provides refinancing loans and home equity loan programs. If you are in the market for any of these loan products, you may want to consider visiting the administration’s official website: www.FHA.gov

Qualifying for an FHA Loan

Many people assume that they would not qualify for an FHA loan, so they don’t bother checking into it. However, qualifying might be easier that one would think. If you can answer yes to the following questions, you have a good chance of qualifying for a loan:

  • Do I have a steady employment history or have I been with the same employer for the last two years?
  • Has my income consistently increased over the past two years?
  • Is my recent credit history good?
  • Has it been more than two years since I filed for bankruptcy?
  • Has it been more than three years since I had a loan foreclosure?
  • Will my monthly mortgage payments be approximately 30 percent of my gross income or less?

 


Comments

Jasmine, you can find out more about the FHA by checking out their official website: www.fha.gov

-- Contributed by: Tamsen Butler

love the web site it is so cool and think you should put more pichers of the inside of the housing admin. but you also should put stuff that you do and stuff on the web site

-- Contributed by: jasmine

Johnny, this information can be found quickly and easily on the HUD website: www.HUD.gov. Click on "HUD Homes" and then select your state. You will be directed to the appropriate link which will give you a free listing of HUD foreclosure homes available in your area.

-- Contributed by: Tamsen Butler
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