What is FHA

FHA or Federal Housing Administration is a branch of HUD or Housing and Urban Development that works through local mortgage lending agencies to give Federal mortgage and loan insurance for those who wish to own a home or do home improvement projects.

It is a government-own corporation that was established under the National Housing Act of 1934 to promote better housing standards and conditions.

FHA aids first-time buyers and those who would probably not be able to pay the required down payment for conventional loans through insuring mortgage to private lenders. It also ensures loans for buying mobile or manufactured homes.

It also assists in providing low-cost houses for rent through insuring loans land developers and builders who make or improve apartments and other multifamily housing developments.

Generally, FHA aims to make available sufficient home financing system by providing insurance mortgages and to make the mortgage market as stable as possible.

FHA helped mortgage insurance products that started to make the nation's rate of home ownership to spike to an all time high of 66% on the third quarter of 1997. One of these products is the long time amortizing loan.

The following are the programs conducted by FHA to achieve its goals:

a. Streamline refinancing for FHA mortgages

b. Down payment gifts

This is one very popular financing aspect from FHA. It allows you to receive your down payment as a gift, as long as it's from a relative.

c. FHA bridal registry account

d. Bankruptcy and foreclosure

FHA must have the most lenient rules when it comes to bankruptcy, but it is still required that an applicant has a valid reason and has his credit re-established.

e. Refunds on FHA loans

If one ever paid off a home loan supported by FHA, one may have money owed to that person.

f. Single family mortgage insurance

Aims to provide mortgage insurance for a person to buy or refinance a principal residence.

g. Single family rehab mortgage program

It provides mortgage insurance for a person to refinance or buy a principal residence or an investment property and to accomplish improvement of an existing 1 to 4 unit home.

h. Property improvement loan insurance.

Another loan program from FHA which includes the 203(k) rehab program.

i. Multi family mortgage insurance program

It is an insurance program for an existing 5 or more units home.

FHA keeps up with the government's goal to keep on reinventing, automating, and streamlining the process of home ownership. This is made evident by the following data:

1. Several single family mortgage insurance programs, i.e., the section 203 (k) purchase rehabilitation project that has been greatly improved. It was given so much attention that trainings were conducted for realtors, lenders, and non-profit organizations country-wide to make the program work for them as well as with the consumers.

2. FHA relies on automation since it provides equal treatment for all the applicants and quicker processing.

3. With the manufactured housing area, FHA ensured that all manufactured homes comply with the required improved safety standards.

4. FHA utilizes the Internet in executing its business procedures. FHA Connection is made available online to enable lenders to submit information regarding their insurance endorsements. Through the HUD/FHA homepage, homeowners can easily access data concerning premium refunds on mortgage insurance.

James Monahan is the owner and Senior Editor of FHACentral.com and writes expert articles about FHAloans.

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