The Federal Housing Administration (FHA) is a division of the US Department of Housing and Urban Development (HUD). FHA mortgages are insurance backed loans made by approved FHA lenders such as McGlone Mortgage. FHA does not lend the money; it simply insures that the total mortgage will be paid if a buyer defaults.
An FHA loan requires as little as a 3.5% down payment. This money may be gifted to the homebuyer from an FHA allowable source. Additionally, FHA allows for the use of seller concessions to assist in paying borrower closing costs and prepaid expenses. FHA loans require upfront mortgage insurance (MIP), which may be financed into the loan as well as monthly premiums. FHA loan limits are dictated by geographic location and vary based on where the home is located (click here to check your area’s specific loan limits). Closing costs for an FHA mortgage also vary based on location. Purchase and Refinance transactions are both eligible for FHA loan programs.
As an added bonus, FHA mortgages tend to have more forgiving requirements compared to conventional mortgages in terms of past credit history. A bankruptcy discharge from as little as two years ago may not hinder a homebuyer from qualifying for the FHA program.