FHA Home Loan


FHA Home Loan

FHA home loans are loans backed by Government. FHA loans are guaranteed by one or two federal agencies. FHA loans are termed as Federal Housing Administration Loans. Loans or Mortgages that are funded by private or commercial lenders but insured by the Federal Housing Administration (FHA) under that Department of Housing and Urban Development are termed as FHA Home Loans.

Advantage of FHA home loans:-
FHA home loans are easier to qualify for and allows a borrower to finance more of the loan amount than non-government loans. When going for a home loan, a borrower may only be able to finance 80% of the loan amount, a FHA home loan allows a borrower to finance 97% of the loan amount.

It is very useful to First-time Borrowers, who have little money to put down and, have a short credit history, Borrower who is not qualifying for a Conforming loan can go for FHA home loans.

FHA home loans are very beneficial to low income families, as there is no upper limit to how much income a family can have to qualify. An FHA home loan provides low interest rates with very low down payments.

FHA home loans creates great opportunities for improving housing areas that still needs development. Credit is a always a major issue when applying for a home loan, but with the help of FHA home loans an individual can seek a loan regardless of credit score situation.

FHA home loans are available to individuals in specific locations throughout the country. You can look online or search for an agent of FHA loans in qualifying areas.

Apart form using FHA home loans for first time homes purchase FHA home loans can also be used to purchase investment properties In addition to purchasing first time homes, FHA home loans can be used to purchase investment properties.

An FHA home loan allows you to buy a house with as little as 3% down, instead of the higher percentages required to secure many conventional loans.

Here is the formula How to calculate the FHA Home Loan you can afford?
For an FHA loan, your monthly housing costs should not exceed 29% of your gross monthly income.
Total housing costs = PITI
PITI = Mortgage principal, interest, property taxes and insurance. These terms together are termed as PITI
Example:-Monthly income X .29 = Maximum PITI .If your monthly income is say supposing $5,000, that means $5,000 x .29 will be your maximum PITI.

Your total monthly costs, adding PITI and long term debt, should be no more than 41% of your gross monthly income.

To conclude an FHA home loan does not make home loans—but insures them. If a home buyer defaults, the lender is paid from the insurance fund. To qualify for FHA home loan, you'll need to have a good credit history, and sufficient income.