FHA mortgage solutions can help first-time home buyers or those with little or no credit become involved in the process of buying a home with a mortgage. FHA stands for Federal Housing Administration. The FHA mortgage is best for homebuyers who canít afford a very large down payment, who may have bad credit or may be starting off with no credit at all, or all of the above.

Often if you are a borrower interested in an FHA mortgage there will be limitations set, like seeking a loan of a certain amount. So if you are interested in an FHA loan, you will not be a borrower who can afford to buy a $500,000 home, but someone who is looking for a modest home on a modest income to get your foot in the door with FHA home mortgages.

Another important factor to keep in mind when considering FHA loans is that if you are capable of applying and being accepted for a conventional loan, an FHA mortgage is probably not for you. 

The FHA is not just for first-time borrowers or no credit and bad credit home buyers. Anyone can apply for an FHA loan, but the major stipulation is that you cannot apply for more than one FHA loan at a time. So, it does not matter if you are applying for a mortgage from the FHA for your first, second, or tenth mortgage, but if you already have a loan of this type on a previous home that has not been sold to someone else, or until you refinance with a conventional loan, you will not be able to apply for another loan until that home has been sold which frees up the mortgage availability from the FHA for you once again.

There are many different ways to find out more information about the FHA type of loan. Many people are under the impression that a borrower can only receive this type loan if they are purchasing a government-owned home, like a HUD home, or Housing and Urban Development. This is not the case. Most private and third-party lending companies also offer FHA loans to mortgage seekers qualifying for FHA loans. The mortgage lenderís funds are insured, in part, by the U.S. Government on FHA loans to help low-income people become home owners.

Similar to conventional loans, FHA loans are offered with a variety of options for interest rates. You can receive an FHA loan that is a 30-year fixed rate mortgage (FRM) or a 30-year adjustable rate mortgage (ARM). Most adjustable rate mortgages come with a term like 3/1 or 5/1 that means the interest rate on your FHA loan will remain fixed for 3 years of 5 years and will then go to an adjustable rate.


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Some mortgage lenders of FHA loans also offer different options for buyers, such as the possibility for home improvement costs to be included in your loan. Since many first-time homebuyers or low-income buyers may not have the money saved up to make improvements on their home upon purchase, lenders offer this option in the FHA loan. Remember, if you borrow a straight mortgage from the FHA, you may get a better mortgage interest rate than if you are interested in a FHA mortgage with a home improvement clause included in that mortgage loan. Both because the mortgage price will cost more and because the interest rate may go up with a combined home purchase/home improvement loan, you could find yourself paying more in the long run.

Remember that there is always the option to refinance the FHA into a conventional mortgage down the road. If you are a new homebuyer who feels the mortgage from FHA may be right for you to start off home ownership, but think you might have the salary or the credit to afford a traditional mortgage down the road, consider the mortgage through the FHA an option for financing until you can afford to refinance.

You can find information regarding the FHA loan at the HUD website but there is also additional information available with many mortgage companies and real estate agencies in your area.



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