FHA Loans Are "Rediscovered"

The “Rediscovered” FHA Loan
I spoke to our lender the other day. She said the majority of the loans she is writing are FHA.
What is FHA? What does this translate into?
To begin, FHA is an acronym for Federal Housing Administration. FHA is part of HUD, which is an acronym for Department of Housing And Urban Development. An FHA loan simply means the loan carries a guarantee. FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA has been insuring properties since 1934.

FHA mortgage insurance protects lenders against loss if the homeowner defaults on their mortgage loan. The lenders bear less risk because FHA will pay the lender if a homeowner defaults on their loan. Loans must meet certain requirements established by FHA to qualify for insurance. You do not need a perfect credit score to qualify. FHA does not have a minimum score requirement. However, many FHA lenders have set their own minimum standards at 580.

The FHA Advantage
Conventional lenders are requiring higher down payments and higher credit scores, as was the norm (a proper norm in my opinion) a few years ago. FHA loans have the lowest down payment options available in today’s mortgage market. FHA allows down payments as low as 2.55% for borrowers using their own funds, or a 3% down payment if the down payment is a “gift” from family, employer, or charity organization.

FHA Has Increased Loan Limits
Loan limits have been increased. The limit varies nationally. Go to https://entp.hud.gov/idapp/html/hicostlook.cfm to obtain your local loan limit numbers.
This is a realistic increase. For example, the limit in my geographic area of Sarasota, FL, USA, is now $442,000. This value is right in the middle of the majority of home sales.
There is additional information at http://www.hud.gov/fha/.