FHA loans are sanctioned by the lenders that are approved by the central government that are insured by the Federal Housing Administration to those with low to moderate income levels. It is a type of a mortgage loan that allows borrowers to pay a very low down payment which is as low as 3.5 percent and has less stringent and more flexible criteria of lending.
It is very popular type of loan among people because of the low down payment. That is why many new borrowers opt for this loan which lends the creditor up to 96.5% of the amount for purchasing their homes. The remaining 3.5% of the loan can be considered even if the amount is a grant or a gift.
For the senior citizens, the FHA also issues a Home Equity Conversion Mortgage (HECM), which is a type of a reverse mortgage, that lets senior citizens exchange their equities in their homes for money when they take ownership of their new houses.
- Some more information on FHA loans:
- If you are buying your first home, most likely 1 to 4 unit properties, the FHA loan is the best suited loan for you. The low down payment of only 3.5% will help you in numerous ways.
- If you are a senior citizen, of age 61 or more, then through the HECM program you can opt for conversion of the equity of your fully-owned home to cash.
- The FHA loan will also let you add the amount required for making your home energy-efficient (like, adding solar panels etc.) into your total loan amount. So the expenses that one would make by themselves on their home, gets added to the FHA Energy-Efficient Mortgage.
- FHA loans are sanctioned for factory-made homes as well as mobile homes. They are two different types of mortgages, one for the factory-made homes that are to be given to those who own their own land, and second to those who wish to buy a mobile home for staying at the mobiles home parks.
- If you have a low or moderately bad credit score history, you may be eligible to apply for FHA loans. However, the down payment may increase to 10% or more, depending on your credit score.
- Borrowers will have to apply for their FHA loans through FHA approved lenders only. FHA does not provide the loan, rather acts as an insurer.
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