FHA Mortgage Loan

If your credit scores is low, but you have never been late on your mortgage, then perhaps an FHA mortgage loan is right for you.  An FHA mortgage loan is insured by the Federal Housing Administration (a division of the Department of Housing and Urban Development (HUD)).  This loan is federally insured in order to minimize the risk to the mortgage lender.  It is most advantageous to a first time home buyer, who typically has very little cash available for the downpayment.  Although an FHA Mortgage Loan is not for everyone, it can be an excellent tool to help you purchase a home with very little cash equity.

Items that may be added to your monthly payment include funds that will pay your property taxes, hazard insurance and mortgage insurance.  Your insurance company will base the premium on your property value.  Generally, this insurance is set up in your mortgage loan so that you don't have to come up with a large amount of money once a year to pay it.  The amount of the insurance varies, but generally it runs about one-half to 1% of the loan amount.

The FHA limits the types of loan programs it insures, but it will insure the more popular 30 year fixed, 15 year fixed and one year adjustable loan programs.  FHA mortgage loans enable you to make a low down payment and get a mortgage loan for the balance of the purchase price.  If you buy your home using a loan sponsored by the FHA, you will have to purchase FHA insurance on your mortgage.  FHA insurance can be included in your monthly mortgage premium.

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An FHA mortgage loan is an insured loan; this significantly minimizes any risk to mortgage lenders.  The FHA Mortgage Loan is not available for everyone -- it is controlled by each state and each county of the particular state.  If a borrower decides that an FHA mortgage loan is right for them, there is a process that the FHA requires the borrower and the property to go through.  An FHA mortgage loan is often a great deal for first-time homebuyers who are looking for the best possible arrangement for a mortgage.