FHA Loan

DEFINITION of 'FHA Loan'

A mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low to moderate income borrowers who are unable to make a large down payment. FHA loans allow the borrower to borrow up to 97% of the value of the home. The 3% down payment requirement can come from a gift or a grant, which makes FHA loans popular with first-time buyers.

BREAKING DOWN 'FHA Loan'

In addition to traditional first mortgages, the Federal Housing Administration offers a reverse mortgage program known as a Home Equity Conversion Mortgage (HECM), which helps seniors convert the equity in their homes to cash while retaining the titles to their homes.

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RELATED FAQS
  1. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  2. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  3. How many FHA loans can I have?

    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>
  4. Are FHA loans assumable?

    Loans insured by the Federal Housing Administration (FHA) on or after Dec. 15, 1989, are assumable by qualifying borrowers. ... Read Full Answer >>
  5. Can FHA loans be used for foreclosures?

    A buyer can use an FHA-insured loan to purchase a foreclosure as long as the house will be the borrower’s main residence. ... Read Full Answer >>
  6. What is the difference between a PMI (primary mortgage insurance) loan and a Federal ...

    Home buyers who are unable to contribute a traditional down payment of 20% may think home ownership is out of reach. However, ... Read Full Answer >>
  7. What is the debt ratio for an FHA loan?

    The Federal Housing Administration (FHA) provides low- and moderate-level income earners the opportunity to purchase a home ... Read Full Answer >>
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