The Federal Housing Administration was established in 1934 to promote home sales during the Depression. By financially guaranteeing loans, the FHA increases much of the risk of non-payment and foreclosure by private lenders. It is important to remember that the FHA is not a lender; They only guarantee your loan.
Advantages:
- Bankruptcy is not an automatic disqualification.
- Less strict credit requirements.
- Lower interest rates.
- The deposit is lower.
- Lower mortgage points and other closing cost requirements.
- Resale can be done faster.
- Supported by the US government.
Properties:
- Deposit required.
- Higher MEP than traditional loans.
- Credit limits are lower than traditional.
- MIP required, regardless of loan-to-value (LTV).
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