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A Few Important Things To Know About FHA Home Loans

Sep 26th 2015 at 4:06 AM

Are you a 1st time home buyer? Considering the present economic state of the country – coming up with enough cash required for a home loan down payment can be a real difficult proposition. But there are also State and local home loan programs those require affordably low down payments and FHA home loan backed by the Federal Housing Administration of the United States is one of them. This FHA loan program requires applicants to pay only 3.5%f the total loan amount as down payment which is certainly a lot more affordable than the non-government mortgage loans of conventional type those require anything between 5% to 20% down payment and also have higher fees and stricter guidelines.

There is no doubt that FHA first time home buyer loan is a very good choice for people looking to buy the first home of their life – but there are also a few things about these loans one must know. These loans require the borrower to pay two types of mortgage insurance premiums – front mortgage insurance premium and annual mortgage insurance premium. The first type of premium can be added to the loan amount and paid at closing. On the other hand, the annual premium is prorated and added to the monthly mortgage payment amount. There is a network of FHA approved lenders who can provide you with all the required information for FHA home loan requirements and also mortgage quotes.

A first time home buyers program is normally designed to help by offering grants or ‘silent’ second mortgages against nominal or little repayment until the property is sold or refinanced by the home owners. Obviously, for availing these loans borrowers are required to meet certain eligibility criteria like living in the property for a minimum period of three years etc. It is the different State housing finance agencies and also local housing organizations through which most of the mortgages for first time buyers are offered and a list of all these agencies and organizations can be found with the National Council of Housing Finance Agencies. There are also many real estate professionals and mortgage lenders who help their clients to connect with the available loan programs. Borrowers can also avail interest subsidies through MCCs or Mortgage Credit Certificates offered by various state and local governments provided that they have moderate to low income.

One of the most important advantages of FHA home loan over conventional non-government loans is their low cash requirement for closing. It has been seen that making a 20% down payment plus the closing cost is a tough ask for most 1st time home buyers and this makes these loans a very good choice for them. Moreover the FHA loans also have competitive interest rates and every month equates to a lower payment. This lower interest allows the borrowers to pay a lot less over the entire life span of the loan. FHA is fairly lenient in offering these loans and applicants certainly stand a very good chance of getting approved. To learn more about FHA housing loans visit    

ABOUT THE AUTHOR has helped thousands of first time home buyers to achieve the dream of owning a home. They provide the best first time home buyer programs, tools, tips, and information on the steps in buying your first home.

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