How to Understand an FHA Home Loan

With the recent changes in the housing market and mortgage industry, more and more home buyers are looking to FHA loans. But what is an FHA loan, and what can it mean to you?

Instructions

Difficulty: Moderate

1. FHA stands for Federal Housing Administration.
2. FHA is a loan program under the Department of Housing and Development (HUD).
3. The Department of Housing and Development (HUD) is the federal department responsible for the major housing programs in the United States.
4. The federal government does not loan the money to the borrower in an FHA loan, they insure the loan. This makes it less risky for the lender.
5. The borrower pays the FHA Mutual Insurance, Mortgage Insurance Premium (MIP).
6. A lender must be approved as an FHA lender before they can offer FHA loans.
7. The down payment for an FHA loan begins at 3% for a buyer who will be occupying the property.
8. The maximum loan amount of an FHA loan varies, depending on the location of the property.
9. The buyer must pay a 1% loan origination fee.
10. There is no prepayment penalty for an FHA loan.
11. For more information on FHA or any recent changes to the program, contact an approved FHA lender.