FHA Loan is given by the lenders who are approved by FHA and are considered as federal assistance mortgage. The FHA just provides the insurance on these home loans. The Federal Housing Administration, FHA insurance on mortgages ensures the lender that the borrowed amount will be given back and thus act as a protection. FHA loans are typically designed for the low income families so that no one in United States is deprived of the right of owing a home. People who do not qualify for Private Mortgage Insurance (PMI) and the ones who cannot afford the down payment are generally eligible for FHA loans. There are many home loan programs in the market, few FHA loans are as follow:
Fixed Rate FHA Loan
Adjustable Rate Mortgage, ARM
Growing Equity Home Loan
FHA Loans for Condos
Energy Efficient FHA Loan Programs
FHA Reverse Mortgage
FHA Graduated Payment Mortgages
FHA Loan, Fixed rate mortgage is the standard loan type that is given either for the period of 30 years or 15 years. Borrower can use this loan to buy a single family home, Duplex , triplex and fourplex. Fixed rate FHA loan is generally taken by the first time home buyers because they can finance 97% of the home loan. The main advantage of this is keeping closing cost and down payment very low. Moreover in fixed rate mortgage, closing cost can be gifted by non-profit organizations, relative or other government agency. On this FHA loan type the mortgage insurance is also very reasonable, which is revised after five yeas that reduces the monthly payment further.
FHA Adjustable Rate Mortgage, ARM does not have fixed interest rate through out the home loan cycle and covered under section 251 of FHA loan types. The interest rate vary along with the real estate market and may increase or decrease over the period of time. But the increase cannot exceed the predefined limit that is generally one percentage point. Through out the life of FHA loan, the interest rate cannot exceed 5% of the initial rate. This home loan is generally given to low to moderate income families. In this type of FHA loan program the interest rate and the home loan payment is kept minimum for the initial period. AT any time during the Adjustable Rate Mortgage, borrower can shift to fixed rate mortgage by refinancing the FHA Loan.
FHA Growing Equity Mortgages are specifically designed for young families and first time home buyers. In this type of FHA loan program the initial payment of the mortgage is kept low but it increases with the time. The insurance to this is covered in Section 245(a) and given to the individuals who have low income but the income is expected to increase in the coming months. The Growing Equity Mortgage is taken up by the individual with low income and first-time homebuyers.
Energy Efficient FHA Loans are made by keeping in mind the energy conservation issues. This loan type eliminate the need of additional mortgage for home improvement. The cost of improvement can be 5% of the property value or $4000 and cannot exceed $8000.
FHA Refinance loan uses the equities of the home. This FHA loan type is generally used for the education of children, home improvement and consolidating bills. This loan is given to the applicant who are using the home for self residence only. Refinance loan is further categorized as
Cash out refinancing
FHA Reverse mortgage is typically made for the homeowners who are 62 or above years of age. This FHA loan is also called Home Equity Conversion Mortgage (HECM) in which the home equities are converted into line of credit or income.
FHA Condominium Home Loan is tailored for the borrower who are going to buy a unit in the condominium. Section 234(c) offers the insurance on this type of FHA loan program. The insurance is given for the period of 30 years by the Federal Housing Administration.
FHA Graduated Payment Mortgage is given to the borrower who at present has low income but expected a growth in the coming 5 to 10 years. The initial home loan payments are kept low but as per the plan, the monthly payment will see an increase.
So as a borrower you can take home loan from the number of mortgage programs for which FHA loans insurance is provided if eligible to have that.
FHA Home Loans deals in different kinds of FHA loan programs and helps you in getting the same. It is not a government agency but provides every information on FHA loans types. Website:http://www.fha-home-loans.com/
HUD, The Department of Housing and Urban Development