Tuesday, July 3, 2012

FHA Loans Facilitate Home Ownership

The Federal Housing Administration (FHA) program first began in 1934 in an effort to encourage home ownership despite the difficult economic times of the era. The program enables consumers who may not qualify for a standard loan to obtain the financing they need to purchase a home without income limitations.

FHA loans differ from typical loans in that they are insured by the Federal Housing Administration, which is a part of the Department of Housing and Urban Development (HUD). Because this insurance reduces the lender's risk on the loan, lenders have greater flexibility with regard to approving loans. For example, FHA loans are not as restrictive with minimum credit scores so a client may be able to obtain a loan despite having had credit problems or even a bankruptcy in the past. Alternatively, if a consumer does not have a significant traditional credit history, it may still be possible to obtain financing by documenting payment histories on items such as rent and utilities. Individual policies by lender may vary so feel free to call me for additional clarification.

FHA loans require a down payment of as little as 3.5% of the purchase price. The down payment may be obtained as a gift from a family member.  Also, FHA loans allow the seller to contribute up to 6% of the sale price in seller concessions.  This money can be used to go towards the total amount needed at closing from the borrower. 

FHA loans are processed just like any other loan, and they provide a wonderful opportunity for consumers who are seeking to achieve home ownership!  If you would like to know more about the FHA loan or any other type of home financing please do not hesitate to give me a call.


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