FHA Mortgage Loan Program – Federal Housing Administration
For decades the housing market has seen a need for affordable lending solutions to meet the lending needs of communities nationwide, a FHA Mortgage Loan Program has been the answer to many. While in recent years, Fannie Mae and Freddie Mac have come to offer affordable conventional financing solutions, the Federal Housing Administration (FHA) has been providing these types of solutions and resources to borrowers for decades.
Unlike conventional financing, FHA Mortgage Program’s are more unique in that the Federal Housing Administration insures the subject mortgage in case of borrower default1. This lowers risk to lenders which may then offer more favorable repayment terms to borrowers.
Some benefits include lower down payment requirements, reduced closing costs, and more liberal credit eligibility standards.
New Century Mortgage offers a variety of mortgage programs, such as the FHA Mortgage Program, a solutions for 1-4 unit dwellings. Under the FHA umbrella, borrowers can take advantage of a variety of offerings that meet their particular needs for both purchases and mortgage refinances.
Here is a quick look at the history of the Federal Housing Administration (FHA), as well as some of the loan programs available that borrowers can take advantage of.
Federal Housing Administration (FHA): A Brief History
The Federal Housing Administration has been around longer than other lending agencies. Fannie Mae, in particular, started in 1938, but the FHA began four year prior in 19341. However, in 1965 the FHA assimilated under the Department of Housing and Urban Development (HUD) agency umbrella. Since its inception, it has insured over 46 million mortgages.1
Over the years the FHA has played an important role in serving the credit needs of American communities. In times of recession in the 1980’s and early 2000’s (especially during the financial crisis) the FHA provided mortgage credit as financial markets imploded.1
Unlike other government entities, the FHA can operate solely off the premiums it collects from borrowers (through lenders) to offset the costs of the lending programs it offers. The agency boasts a portfolio of around $1.3 trillion (in unpaid principal).1
FHA loans continue to entice new borrowers due to their credit flexibilities and affordable repayment options.
FHA Mortgage Loan Program
Unlike other loan programs, the FHA offers a variety of financing solutions to service the full spectrum of borrowers. FHA loans are not restricted to solely first-time homebuyers or borrowers with pristine credit. You can also refinance from a non-FHA loan to this program, this allows for borrowers to benefit the flexible terms as compared to other programs. You can review the FHA condo list5 you own or are interested in buying is on their list.
Most FHA loan programs are only available through FHA approved lenders like New Century Mortgage. Here are a few FHA mortgage programs that New Century Mortgage clients can take advantage of:
Fixed Rate and Adjustable Rate FHA Mortgage Loan Programs
Regardless of whether you are purchasing or refinancing, FHA offers both fixed rate and adjustable mortgage solutions to qualified consumers. In fact, borrowers who meet certain credit thresholds may qualify for a lower minimum down payment.
Properties are not just restricted to single family homes. You can also use FHA loan programs to purchase. or refinance eligible condominiums as well.2
Home Equity Conversion Mortgage (HECM)
Seniors looking to pull equity from their home in order to supplement their household income should consider a HECM. It is available to senior homeowners ages 62 and up, and it is the only available through an FHA approved lender.3 A HECOM also known as a reverse mortgage.
Using the lesser of the appraised value or the product’s loan limit, this solution generates recurring monthly income using the home’s equity.3 Borrowers that have significant equity in the property is a main factor for this loan program. You can utilize a reverse mortgage for a purchase or a refinance program.
Streamline FHA Mortgage Refinance
Borrowers that meet FHA credit qualifications may qualify for a faster and more affordable streamlined refinance which requires limited borrower documentation and underwriting. The existing mortgage being refinanced must also already be insured by FHA and borrowers must be current on their mortgage payments.4
Want to learn more about the FHA Mortgage Program? New Century Mortgage can answer all your FHA related questions.
1 Federal Housing Administration: HUD.gov / U.S. Department of Housing and Urban Development (HUD). (n.d.). Retrieved June 10, 2020, from https://www.hud.gov/program_offices/housing/fhahistory
2 FHA Condominiums: HUD.gov / U.S. Department of Housing and Urban Development (HUD). (n.d.). Retrieved June 10, 2020, from https://www.hud.gov/program_offices/housing/sfh/ins/sfh_ins_condominiums
3 HUD FHA Reverse Mortgage for Seniors (HECM): HUD.gov / U.S. Department of Housing and Urban Development (HUD). (n.d.). Retrieved June 10, 2020, from https://www.hud.gov/program_offices/housing/sfh/hecm/hecmhome
4 Streamline Refinance Your Mortgage: HUD.gov / U.S. Department of Housing and Urban Development (HUD). (n.d.). Retrieved June 10, 2020, from https://www.hud.gov/program_offices/housing/sfh/ins/streamline
5. Federal Housing Administration: https://entp.hud.gov/idapp/html/condo1.cfm