FHA Loans
Three main purposes of the Federal Housing Administration (FHA) are to:
1. Promote improved housing standards 2. Assist in the stabilization of the mortgage market 3. Provide mortgage loan insurance
An FHA appraisal on a construction property is valid for
12 months
FHA (Federal Housing Administration) has been an agency within the U.S. department of housing and urban development (HUD) since
1965
As of January 1, 2008 the required down payment on an FHA insured loan is
3.5%
Maximum loan term on FHA Section 245 GPM program is
30 years
What percentage yearly increase is most common on an FHA Section 245 GPM program
7.5 With five years to reach maximum payment
The maximum purchase money loan amount for FHA insured loan is
96.5% of the sales price or appraised value which ever is less
The lender receives payment from FHA insurance on a loan
After a foreclosure sale
FHA loan programs
Are administered through the Federal Housing Administration (FHA.)
The maximum amount for an FHA insured loan
Differs for high cost and low-cost areas
When a conditional commitment is issued after an FHA appraisal this means that the FHA will insure a loan on the property
If the borrower qualifies for the loan
The FHA began requiring borrowers to pay an upfront payment at closing and monthly payments over a period of years to cover the mortgage insurance premium (MIP)
In 1991
When buying a home with an FHA loan a homebuyer may use gift funds for the down payment
In some cases
FHA section 245 program is designed to assist first time buyers who might otherwise be unable to buy because of rising prices
Its main feature is that the monthly payments on the loan are lower in the first year of the loan and increase over a period of years up to the final payment level
The time required for processing an FHA loan is usually
Longer than for a conventional loan
FHA does not
Make loans itself or provide housing
Standards which property must meet to be approved for an FHA loan are specified in the FHA's
Minimum property requirements
Most FHA loans are limited to
Owner occupied property
Federal law prohibits FH a loans from including a due on sale clause or
Prey payment penalty
A pre-payment penalty on an FHA loan is
Prohibited by law
The most familiar function of the FHA is to
Provide loan insurance programs
The basic FHA loan insurance program is
Section 203(b) - for residential properties of 1 to 4 families
An FHA appraisal on an existing property is valid for
Six months
The FHA 203B loan program promotes home ownership by providing insurance for loans on residential real estate
The FHA does not loan money it insures loans made by primary lenders against loss due to default
The FHA INSURES loans made by private lenders which meet certain guidelines and standards
The FHA mortgage insurance PROTECTS the lender against losses resulting in default by the borrower
The results of an FHA appraisal are made available to
The lender only
The FHA pays a payment to the lender when a buyer defaults after a foreclosure sale
To pay for these losses the FHA charges all borrowers a mortgage insurance premium (MIP) on all FHA loans
The FHA insures loans not guarantees them because the money to pay for losses comes from
premiums paid by borrowers
FHA Section 245 GPM program is limited to
single-family owner occupied homes