The FHA Program and Why It Is Beneficial

March 23, 2012 by  Filed under: Loans 

The Federal Housing Administration, FHA, offers mortgage insurance on loans made by approved lenders in the United States and its territories. The FHA program is the largest insurer of mortgages, insuring over 34 million properties since 1934. Congress created the FHA in 1934 and became a part of the department of Housing and Urban Development’s (HUD) office in 1965.

In 1934, the housing industry was the lowest it has ever been. 2 million construction workers were out of work. Terms were hard to meet to get financing. The terms for mortgage loans were limited to 50 percent of the property’s market value with a repayment schedule over three to five years and ending with a balloon payment. In 1934, only four in 10 households owned homes. You can imagine what kind of effect this would have on the US economy.

In 1940, the FHA helped finance military housing loans for returning veterans and their family after the war. In the 50’s, 60’s and 70’s the FHA helped to produce millions of privately owned apartments for the elderly, handicapped and lower income citizens.

In 1965 the FHA program became a department in the Housing and Urban Development(HUD) Office of Housing. With the recession in the 1980s, the FHA made it possible for people to get a home loan.

The FHA began to try to stable the declining home prices and allowed potential homebuyers to receive the financing they required during the 1980’s. In 2001, the homeownership rate increased to 68.1%. The FHA has been responsible for making it attainable for many Americans to receive an FHA home loan.

There are many benefits of FHA insured mortgages:

Easier to Qualify:

Lenders may be more willing to give you loan terms that help you qualify because FHA insures your mortgage.

Less than Perfect Credit:

It is easier for you to qualify for an FHA loan than a conventional loan if you have had credit problems, such as a bankruptcy.

Low Down Payment:

FHA loans have a 3.5% down-payment. This down-payment can com from a family member, employer or charitable organization as a gift. Other loans will not allow this.

Lower Costs:

Because the Federal government insures the loans the FHA loans have competitive interest rates.

Protects Your Home:

The FHA has been around since 1934 and will continue to be here. If you come on difficult times, FHA has many options to help you avoid foreclosure.

Sean has been a writer for 10+ years and is knowledgeable in many different areas.

Article Source:
http://EzineArticles.com/?expert=Sean_Winter

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