FHA Mortgage Insurance
How FHA Mortgage
Insurance Works
FHA's mortgage insurance programs help low- and moderate-income
individuals and families obtain financing to buy homes or refinance
their current mortgages.
FHA mortgage insurance
allows a homebuyer to make a low downpayment and get a mortgage loan
for the balance of the purchase price.
The mortgage loan is made by a HUD approved lender, such as a bank,
mortgage company, or credit union. FHA insures the mortgage and pays the
lender if the homebuyer defaults on the loan, or fails to repay the
loan.
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Who Can Get FHA
Mortgage Insurance
If you are buying a home,
refinancing a mortgage for a home you already own, or making home
improvements, you may qualify for an FHA-insured mortgage.
In fact, almost anyone who has a satisfactory credit record, enough cash
to close the loan, and sufficient steady income to make monthly mortgage
payments can be approved for an FHA-insured mortgage. There is no
upper age limit and no certain income level required, although
individual mortgage amounts are limited by law. Generally, homebuyers
must live in the home in order to get an FHA-insured mortgage loan.
The program is not open to investors.
To find out if you qualify for an FHA-insured mortgage loan, you should
visit a HUD-approved housing counseling agency or a HUD-approved lender,
such as a bank, credit union, or mortgage company
How FHA Mortgage
Insurance Can Help You
Whether you are buying a home, making
home improvements, or refinancing your current mortgage, you should work
with a HUD-approved lender-such as a bank, a mortgage company, or a
credit union-to apply for a mortgage loan. Once your loan is approved,
FHA will insure the loan and pay the lender if you default on the
mortgage. Because the lender is protected by this insurance, the lender
can give you better terms on your loan.
A lower downpayment - Some lenders require borrowers to pay 10 percent
or more of the price of a home in cash as a downpayment. With
FHA-insured mortgages, your downpayment can be as low as 3 percent. The
lender will likely require you to prove that you have enough money for
the loan downpayment.
Use of cash gifts toward downpayment - With an FHA-insured mortgage,
under certain circumstances you can use a gift from a relative, a local
nonprofit organization, or a government agency for all or part of the
downpayment and closing costs. |
