Are you wondering What is FHA?, well The Federal Housing Administration, generally known as “FHA”, is the largest government insurer of mortgages in the world– insuring over 35 million properties since its inception in 1934. A part of the United States Department of Housing and Urban Development (HUD), FHA provides mortgage insurance on single-family, multifamily, manufactured homes and hospital loans made by FHA-approved lenders throughout the United States.
For the home-buyer, FHA-insured loans offer competitive rates, smaller down payments, greater flexibility in calculating household income and payment ratios, and even protection requirements against foreclosures. Mortgage insurance protects lenders against loss if the homeowner defaults on his or her mortgage loan. While FHA insured-loans must meet certain requirements established by FHA to qualify for the insurance, lenders bear less risk because FHA will pay the lender if a homeowner defaults on his or her loan.
The down payment can be 100% gift funds. This is one of the key benefits to the FHA program. Although, keep in mind that proving the source of those gifts funds can be a challenge.
A credit report will be obtained on the borrower and any late payments, collections, judgments, foreclosures, bankruptcies, etc. must have a justifiable explanation in writing by the borrower.
If you have ever paid off a home loan backed by FHA you may have money owed to you. And the government wants to pay you back.