What is an FHA Loan?
An FHA-insured loan is a mortgage backed by the federal government and insured by HUD, provided by FHA-approved lenders. They are designed for low- to moderate-income borrowers, requires a lower minimum down payment requirement and credit scores as compared to conventional mortgages.
The Federal Housing Administration or FHA does not extend and will not offer you with a mortgage loan, it only provides mortgage insurance for the loan you get from a mortgage lender who is FHA approved.
This government-backed insurance is guaranteed to protect the lender against default by the homeowner. Under the terms of FHA insurance, any FHA approved mortgage lender can make a claim against any loss incurred through default of loan repayments. This US government program does not cost American taxpayers any money. All insurance money collected through the program are kept in a single operating account. FHA provides different types of mortgage insurance, according to need, and offers a range of insurance for first-time homebuyers, for multifamily homes, for refinancing and for other types of mortgage. The insurance coverage is often referred to as the “Mortgage Insurance Premium” or MIP.
Details and additional information about FHA loans, guidelines and requirements are readily available by contacting our FHA Home Loan Specialist.