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
An FHA home loan provides low interest rates with very low down
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
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
Here is the formula How to calculate the FHA Home Loan you can
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.