The Department of Housing and Urban Development (HUD) oversees the Federal Housing Administration (FHA). The FHA is the largest mortgage insurer, not just in the United States, but the world.

FHA loans have been around since the depression, but have recently become a popular form of homeownership. This is the because the common predatory lending practices of sub-prime lenders has come under increased scrutiny by the media and the government as foreclosure rates are rising across the country.

Another reason for the increased use of FHA loans as a means of homeownership is due to the relaxed requirements, as opposed to other, more conventional, types of loans. FHA loans can still be made available to borrowers with less-than perfect credit and even those that have filed for bankruptcy in the past.

An important fact to note about FHA loans is that the FHA doesn’t actually make the loan. The FHA simply guarantees FHA loans which lowers the risk for the lender. Because of the FHA guarantee and the lowered risk the lender can afford to provide a much better rate, which typically results in lower monthly mortgage payments.

The FHA currently requires a minimum 3% down payment to obtain a home loan. There are, however, many different grants and non-profit organizations that can assist a borrower in making their down payment.

There is currently legislation in the U.S. Senate that is meant to modernize the FHA and eliminate some of the bureaucratic processes of the program as well as eliminating the required minimum down payment and expanding the loan limits in high cost areas.

Borrowers can even use a FHA loan to purchase a new home, refinance their current home or make repairs to a new or old home. With programs like HUD’s 203 (k) and the Streamlined k program making the repairs or renovations your new or current home needs has never been simpler.

Published by Nathaniel Broughton at Mortgage Loan Place