Question:

What should we know about Federal Housing Administration (FHA) loans?

Answer:

The Federal Housing Administration (FHA) has been around since 1934. FHA is helping borrowers qualify easier for loans, and lenders by insuring the loans they extend. Borrowers with almost no cash for down payment, those who have recently finished school, as well as people with marred credit report will usually do best applying for an FHA loan.

FHA loans are not funded by FHA. Rather, FHA takes the loan risk, thus reducing risk for lenders.

FHA Application Details

When beginning application with the FHA, you'd better get ready to provide the following information for the last two years:

  • Addresses you have lived at
  • Names and addresses of your employers
  • Gross salary, W2s and income tax forms
  • Veterans will be required to submit the DD Form 214 along with regular FHA application papers. This form can be obtained from your records office or downloaded from the Department of Defense.

Most popular FHA loan is the 203(b) FHA Fixed Rate Mortgage Loan Program adapted to first-time home buyers. It will keep closing costs and monthly payment to a minimum, allow for up to 97 percent financing, and if you do your homework and improve your credit score before applying for an FHA loan, you'll maximize rates.

Your credit score may be improved if you simply pay off some little debts or credit cards obligations, request from the credit bureaus to clear wrong items from your report (if any), and refrain from entering other credit right right before applying for the FHA loan.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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