How The FHA Is Helping Many Home Buyers Today

By: Seth Earl

Three years ago, the FHA was doing hardly any business, insuring less than 2 percent of all home-purchase loans.
But things have changed for the agency, created in 1934 during the Great Depression. In the year ended Sept. 30, it insured more than 8 percent of all home-purchase loans, as measured by total dollar volume.

When refinancing is added in, the rise in FHA's business is even more dramatic, jumping to an estimated 26 percent of the loan market.

The FHA's backing can loosen the purse strings of lenders, which have become pickier as foreclosure rates have climbed and credit markets tightened.
FHA loans require a down payment of just 3.5 percent and are available to anyone who is buying or refinancing a house, although they might not always be a borrower's best bet.
The FHA does not make loans; it insures them. Borrowers are required to document income and pay mortgage insurance. Loans are generally for 30 years, with fixed interest rates.
FHA loans are a good option for people who otherwise might be shut out of the market or get loans with high interest rates. They include first-time buyers and people with less than perfect credit, according to the FHA and lenders. For some, these loans are now the only option.
That has increasingly become the case as conventional lending has seized up, said Frank Donnelly, a member of the board of governors of the Mortgage Bankers Association of Metropolitan Washington.
"If your choices are between no contract and an FHA contract, FHA looks good," he said.
The government insures the loans against default, making them safer bets for providers. That money comes from the borrowers' mortgage insurance payments. The insurance premiums can be dropped when the amount owed falls to about 78 percent of the value of the home. With conventional loans, many lenders require private mortgage insurance with a down payment of less than 20 percent.

The FHA is the only place that you are able to get a loan to buy a home where you don’t have to put down a large down payment.  With the FHA you only have to put down only 3% and have to be able to show some income.  Another requirement for the FHA is that you have to have a minimum of  a 580 credit score.  This FHA product is the only product on the market where you do not need to have a super high credit score.  Also for the FHA you do not have to have previous mortgage history all you really need is to be able to show 3 trade lines, these trade lines for the FHA would can be anything from a cell-phone bill, cable bill or any other payment that you make every single month. 

Many people today are really taking advantage of the products that the FHA has to offer.  For more information about the FHA and what they can offer Please go to FHAHomeLoans.com