An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.
The FHA program was created in response to the rash of foreclosures and defaults that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making loans accessible and affordable. Nowadays, FHA loans are very popular, especially with first-time home buyers.
What Are the Advantages of FHA Loans?
Typically an FHA loan is one of the easiest types of mortgage loans to qualify for because it requires a low down payment and you can have less-than-perfect credit. An FHA down payment of 3.5 percent is required. Borrowers who cannot afford a traditional down payment of 20 percent or can’t get approved for private mortgage insurance should look into whether an FHA loan is the best option for their personal scenario. Another advantage of an FHA loan is that it can be assumable, which means if you want to sell your home, the buyer can “assume” the loan you have. People who have low or bad credit, have undergone a bankruptcy or have been foreclosed upon may be able to still qualify for an FHA loan.
NewFED™ Mortgage - Mortgages For Every Stage Of Your Life
98 High Street
Danvers, MA 01923
MLO License Info
NMLS #1881 MA License No. MC1881, CT license # ML-1881, NH License No. 9474-MB - Licensed by the New Hampshire Banking Department, RI License No. 20041817LL, FL License No. MLD652, Maine Lender License #SLM8185, Licensed by the N.J. Department of Banking and Insurance. NewFED™ Mortgage is an Equal Housing Lender. Member of the MA Mortgage Bankers Association and Better Business Bureau of Eastern MA.