Overview of FHA loan

FHA Loan is a mortgage issued by a federally qualified lender and is insured by the Federal Housing Administration (FHA). The main purpose of the FHA program was made to promote home ownership. Applying for an FHA loan must go through an FHA-approved mortgagee, for example, Pacific Mortgage Group, LLC. Interest rates are decided on by a mutual agreement between the borrower and the lender – they are not set by the Federal Reserve Board. The FHA maximum loan amount varies from one county to another, there are no income limits on FHA loans and any United States resident may obtain an FHA loan as long as the property purchased will be the borrowers principle residence and is located in the United States.

The following are popular FHA Loan programs:

FHA Loan Program Description
Section 203(b) Residential Loan This offers financing for purchases or construction of owner-occupied residences of one to four units. It is a 30-year fixed-rate, fully amortized, mortgages, with a requirement for a down payment as low as 3.5%, allowing financing for up-to 96.5% of the value of the loan. The FHA has mortgage limits that vary from country to country check their website here to learn more.
Section 203(k) Rehabilitation Loan A purchase rehabilitation loan (purchase rehab) is an option offered to buyers who are looking to improve/renovate their property immediately. This loan will provide the buyer with the funds for the improvements all in the same loan, this is all done with one application, leaving you with one convenient monthly payment.
Section 245(a) Graduated Payment Mortgage The monthly payment for this loan starts off at the lowest level, which then increases at a specified rate. It starts off where payments for the initial year cover only part of the interest rate due, the unpaid amount is then added to the principle balance. After a certain time the loan is recalculated with the new and final payments till the mortgage is paid off.