FHA Mortgage Rates: Loan Programs Right for You

FHA mortgage rates are available as attractive options for helping Americans become homeowners for many decades. Run under the U.S. Department of Housing and Urban Development (HUD), FHA offers mortgage loans that are easier to qualify for and have less stringent down payment requirements in comparison to conventional loans. Some salient features of FHA mortgages are explained below:

Eligibility

Loans and mortgages offered through the FHA are not restricted to low income individuals or low-income families. You can qualify whether you are a new college graduate, a minority, or a highly paid executive.  Additionally, you can refinance a home under an FHA mortgage irrespective of whether the loan was originated via FHA or not.  The FHA program also caters to people with a damaged credit history that may not have qualified for conventional loans.

Restrictions

While there are no income thresholds allocated to qualifying for FHA loans, certain debt ratios are used as a common yardstick to ensure that preclude homebuyers from overextending themselves. The ratios are established by HUD.

FHA Adjustable Rate Mortgage (ARM)

The ARM loan product is also available for all borrowers.  ARM rates vary depending on the duration of the loan, but are attractively priced with reference to current mortgage rates available conventionally to borrowers who do not have good credit history. Typically, the ARM change dates acceptable to HUD are lower and less frequent than conventional change dates.  For example, with the standard ARM product, HUD denotes a maximum increase of 1 percent per year for the rate, while most conventional products offer a 1% increase every 6 months.

Graduate Payments Mortgage (GPM)

Under this program, lenders structure the program such so that the initial mortgage payments are low, but borrowers are given the option to increase their monthly payments over time.

Rehabilitation Mortgage

The FHA Rehabilitation program is commonly referred to as the 203(k) product.  With the 203(k)program, homeowners can apply for financing for the cost of home repairs. The approval process requires that the homeowner submit detailed plans of rehabilitation as well as detailed cost estimates of work to be completed. Once approved under this program, FHA sets up special escrow accounts from which payments are made to the contractor undertaking the rehabilitation project.

Energy Efficient Mortgage (EEM)

Under this program, FHA provides assistance to help cover the cost of energy improvements of a house. The requirements of this program are centered around an inspection and energy rating report. This report determines the amount required for the energy improvements to be made, and funds are disbursed when approved.
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