FHA Mortgages Today

Providing more loans than any other organization, the FHA was established in 1934 and has given loans to over 35 million borrowers. Just to be clear, the FHA insures your loan, it does not fund it. FHA makes it safer for lenders to grant loans because they know that the FHA will pay off whatever is left should you default.

In 2006, President Bush was able to convince Congress to pass a modernization proposal for the FHA that made it possible for families in need to purchase homes. At the time, the FHA mortgage rate was only 5.5 percent. (Here’s a quick peek at the rates for those looking to compare mortgage loan rates. FHA mortgage rates in today’s market dictate that on a 30-year fixed loan at 6%, you will have to pay 1.875 points. You can also get a 6 percent interest rate for a 15 year fixed loan, but the points will only be 1.25.) An FHA loan, if you are a borrower, could be your best option, for a couple of reasons. First of all, you don’t have to have perfect credit to qualify for the loan. Because of the sub-prime lending problem, many lenders have become far more strict about who they lend to. Average and even above average credit just won’t be enough to get a loan now. However, you could still get an FHA loan because other things are considered, like income and debt-to-income ratios.

Bankruptcy can be one other thing that impairs people. As long as there are other favorable factors, FHA loans will still consider individuals who have a previous bankruptcy. If you are really concerned about whether you can secure financing, and you have poor credit or a bankruptcy on record, then you need to get debt consolidation and/or get a debt management plan. Typically, people can get help with making the right steps to reduce their debt-to-income ratio, not to mention potentially improving their credit score.

Typically, FHA loans require a much smaller than typical down payment to get the loan. This is usually seen as an added benefit for many borrowers. Many people can actually benefit from the lower down payment by using the saved money as investment money that will give a return and grow over time.

FHA loans are meant to help responsible and deserving individuals purchase their very own homes. This is one government programs that actually works pretty well.