FHA Home Loans Explained

The Federal Housing Administration (FHA) offers a variety of so-called FHA home loans.   The FHA, which is part of the US Department of Housing and Urban Development (HUD), has been offering housing assistance since 1934. While the FHA does not actually provide home loans, it insures the loan you receive from your lender, so they can offer you a better deal.

The FHA offers a variety of assistance programs:

FIRST HOME: The FHA can help you reduce your down payment to as little as 3.5 percent of the purchase price. In addition, the FHA can help make owning your own home even more affordable by allowing closing costs and fees to be included in your home mortgage. Further, this type of assistance is available on 1-4 unit properties.

FIXER-UPPER: If a fixer-upper is more your speed, the FHA can help you get a loan for the purchase price of the house and the costs to fix the house all in the same loan. The main restriction is that the repairs or remodeling costs plus the purchase price must be equal to or less than the value of the home after repairs.

REVERSE MORTGAGE: If you are over 62 years old or older, your house is your primary residence, and you own it, or have significant equity in your home and you need extra cash, the FHA can help you convert take out a reverse mortgage on your home. In this way, you can get cash for the equity in your home.

ENERGY-EFFICIENT: You can also use FHA home loans to make energy improvements. The loan is called an FHA Energy-efficient Mortgage.

MANUFACTURED/MOBILE HOUSING: The FHA also has financing for people who want to put a manufactured home or mobile home on land they own. In addition, the FHA has loans for people wanting to purchase a mobile home to be located in a mobile home park.

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