FHA Loan

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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. 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 >>
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    The Federal Housing Administration (FHA) provides low- and moderate-level income earners the opportunity to purchase a home ... Read Full Answer >>
  3. How do I calculate how much home equity I have?

    Even though it is normally assumed most people know their home equity, many are still confused about the topic. It is an ... Read Full Answer >>
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    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
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