| FHA mortgage loans were created in 1965 with the | | | | support the entry level price points of the realty |
| goal of promoting home ownership in America. FHA | | | | marketplace. |
| stands for Federal Housing Administration. FHA loans | | | | Most all private mortgages entail "points" or other |
| are administered through this department which is part | | | | closing costs. This further adds to the amount that |
| of the Department of Housing and Urban Development | | | | must come out of the borrower's pocket at closing. |
| (HUD). Even since this program's inception millions of | | | | Many potential buyers can not afford these additional |
| Americans have realized the dream of home | | | | costs. FHA loans seek to solve this problem. |
| ownership through it. | | | | FHA loans have the lender absorb half of these costs |
| There are many private mortgage lenders and always | | | | most usually and the remaining half is attached to the |
| have been. Traditionally, lending standards were very | | | | loan and paid over a long period of time. This saves |
| strict. For a brief period of time they relaxed greatly, | | | | the borrower thousands of dollars in out of pocket |
| however they are quickly swinging back to what they | | | | cash. That makes closing feasible for many who |
| were historically. Borrowers are no longer able to get | | | | otherwise would not have funds to finalize the |
| "no money down" mortgages. Credit standards have | | | | transaction. |
| tightened once again. | | | | Another area which precludes many potential home |
| The impact of these requirements is to effectively | | | | buyers from getting a mortgage is a bad credit score. |
| shut out many just starting life from the mortgage | | | | Lenders today have greatly tightened lending |
| marketplace. Obviously, if you are unable to attain a | | | | standards. Many with no established credit are |
| mortgage this makes home ownership nearly | | | | therefore shut out for this reason. FHA loans seek to |
| impossible. FHA loans are meant to make mortgages | | | | address this. There are much lower credit standards |
| obtainable for those who otherwise would be left out | | | | for an FHA loan. |
| of the process. | | | | FHA mortgage loans allow many to own homes who |
| Most private lenders now require a twenty percent | | | | otherwise wouldn't be able to. Although not a direct |
| down payment. FHA loans, however, only require a | | | | lender, FHA enables the lending sector to make loans |
| 3% down payment in most instances. This is obviously | | | | they otherwise would not be inclined to write. This |
| a dramatic difference. It often translates to tens of | | | | opens up home ownership to many deserving |
| thousands dollars less needed for a family just starting | | | | Americans. |
| off in life to own their own home. It further serves to | | | | |