Federal Housing Administration Loans are mortgages for first-time, low to moderate income home buyers. These loans are made by traditional lenders, like banks or credit unions, but are insured by the government, meaning individuals who could not otherwise afford or get a mortgage for a home can purchase a home to live in.
FHA loans help buyers purchase a home because they require: There is an additional cost to FHA loans, though. Borrowers are required to pay an insurance premium called an Up-Front Mortgage Insurance Premium or UFMIP for short. Ranging from .45% to 1.05% the original loan amount, the UFMIP premium is paid annually to the Federal Government as payment for insuring the loan. It is paid for either 11 years or the life on the loan, depending on the term of the loan and the loan-to-value ratio. FHA loans also require that the property adhere to stricter standards of quality than traditional loans. Specifically, there are detailed checklists that must be filled to ensure the home:FHA Loan Definition
FHA Loan Requirements
FHA Loan Additional Costs
Property Standards for FHA Loans
Federal Housing Administration (FHA) Loan FAQs
FHA stands for Federal Housing Administration.
Federal Housing Administration Loans are mortgages for first time, low to moderate income home buyers.
These loans are made by traditional lenders, like banks or credit unions, but are insured by the government, making them more affordable for individuals who could not otherwise afford a mortgage for a home.
Borrowers are required to pay an insurance premium called an Up-Front Mortgage Insurance Premium or UFMIP for short.
FHA loans also require that the property adhere to stricter standards than traditional loans. Specifically, the home must: protect the health of the inhabitants, protect the security of the property, and not have physical deficiencies that affect its structural integrity.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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