If you are a first time homebuyer or have low to moderate income, you may be eligible for a mortgage insured by the Department of Housing and Urban Development (HUD) through the Federal Housing Administration (FHA). FHA’s mortgage insurance programs help low and moderate income families become homeowners by lowering some of the costs of their mortgage loans. While this insurance is not free, you can finance the up front insurance premium at the time of purchase and add to your regular mortgage payments.
You may be able to get an FHA loan with a low down payment of only 3% of the loan amount or less. FHA also allows 100% of this down payment to be a gift from friends, family or other sources. Many closing costs can also be financed to reduce the up front cost of buying a home.
FHA has maximum loan amounts, which vary from one county to another. It is critical that your loan amount, including financed closing costs, not exceed the maximum set by FHA for the county in which your property is located. There are no income limits on FHA loans.
FHA has several loan programs that include:
Section 203(b) – A single family program that has down payment requirements as low as 3%, allowing you to finance up to 97% of the value of the home.
Streamline refinance – A program that reduces the amount of documentation and underwriting that needs to be performed by the mortgage company.
Section 203(k) – A single family home rehabilitation program that enables you to finance both the purchase or refinance of a house and/or the cost of its rehabilitation through a single mortgage.
Section 203(i) – A single family mortgage program that provides mortgage insurance for a person to purchase a principal residence in a rural area.
FHA ARM – A single family adjustable rate mortgage that provide mortgage insurance for a person to purchase or refinance a principal residence at a lower initial interest rate.
Property Improvement Loan Insurance (Title I) – A program that makes it easier for consumers to obtain affordable home improvement loans by insuring loans made by private lenders to improve properties that meet certain requirements.
Energy Efficient Mortgage – A program that provides mortgage insurance for the purchase or refinance of a principal residence that incorporates the cost of energy efficient improvements into the loan.
Reverse Mortgage – A program for homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining. The program allows homeowners to borrow against the equity in their homes in a lump sum, on a monthly basis for a fixed term or for as long as they live in the home, or on an occasional basis as a line of credit.
If you have ever paid off a home loan backed by FHA, you may have money owed to you. FHA may have an escrow refund waiting for you.