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The Federal Housing Authority (FHA) is part of the U. S.
Department of Housing and Urban Development (HUD). Congress
created FHA in 1934, which eventually became part of HUD
in 1965. FHA was created in order to encourage homeownership.
When the FHA was created, only four out of ten households
owned homes and the other six out of ten were renters. By
2001, 68-percent of the households were now homeowners under
the guidance of the FHA.
The FHA provides mortgage insurance on loans made by FHA-approved
lenders throughout the United States and its territories.
FHA insures mortgages on single family and multifamily homes
including manufactured homes and hospitals. It is the largest
insurer of mortgages in the world, insuring nearly 33 million
properties since its inception in 1934.
FHA is the only government agency that operates entirely
from its self-generated income and costs the taxpayers nothing.
The proceeds from the mortgage insurance paid by the homeowners
are captured in an account that is used to operate the program
entirely. FHA provides a huge economic stimulation to the
country in the form of home and community development, which
trickles down to local communities in the form of jobs,
building suppliers, tax bases, schools, and other forms
of revenue.
FHA is particularly helpful for first time homebuyers and
others who may not be able to meet the down payment requirements.
This can be done through securing an FHA-approved mortgage
insurance or through an FHA / HUD approved loan. FHA-insured
loans are available in rural and urban areas for single-family
homes, 2-unit, 3-unit, and 4-unit properties, and condominiums.
Interest rates on FHA loans are generally market rates,
while down payment requirements are lower than for conventional
loans. Down payments can be as low as 3-percent, and many
times closing costs can be wrapped into the mortgage.
With an FHA-insured loan, you can make extra payments towards
the principal along with the regular monthly payments. This
way you can repay your mortgage faster, saving on interest.
FHA loans can also be used for home improvements for homes
that are a minimum of one year old. The FHA home improvement
loans must comply with HUD's Minimum Property Standards
and all local codes and ordinances. FHA loans, as with other
loans, generally have four parts. Owners must pay the principal,
interest, homeowner's insurance and property taxes on the
home that they buy.
HUD homes are meant for those with low-to-moderate income
levels. Since HUD homes are sold "as-is," without
warranty, this means many savings can be passed onto the
consumer. When HUD homes are sold, they are sold at market
value. But, if there are repairs that need to be made, HUD's
asking price on the home will reflect the fact that the
buyer will have to invest money to make improvements. It
is important to get the home professionally inspected first
in order to itemize the needed repairs. HUD might also offer
special incentives such as an allowance to upgrade the property,
a moving expense allowance, or a bonus for closing the sale
early. In addition, keep in mind that on most sales, the
buyer can request HUD to pay all or a portion of the financing
and closing costs.
In order to get started with HUD FHA-approved government
home loans, contact your local real estate agent for
more details. You real estate agent will have the most current
information concerning FHA loans.
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