Question:

What are FHA government loans used for?

Answer:

FHA is the largest home loan insurer since it was established in 1934. The purpose it is carrying is to provide reliable and affordable homeownership to US citizens.

FHA government loans provide borrowers with better chances to become homeowners. The Federal Housing Administration provides mortgage insurance to lenders, whose loans qualify under the FHA requirements. Thus, the FHA government loans are in fact loans insured against borrowers' default. Also, the FHA government loans allow for borrowers who would otherwise be forced to get sub prime loans and pay killing rates to get better chances to homeownership.

The FHA government loans require very little down payment and allow that the insurance is dropped after equity of 20-22% is reached. Usually, the insurance on FHA loans will be canceled automatically after 5 years, or when 22% of equity is reached.

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