In an effort to stem the tide of foreclosures and loan defaults created by the Great Depression, Federal Housing Administration (FHA) loans were first introduced in 1934. As an ongoing type of federal assistance, millions of FHA loans are still offered today to help people with modest incomes buy reasonably priced homes with down payments as low as 3.5% of the total purchase price.
With an FHA loan, the government doesn't loan the money, but it insures it. The FHA insurance reimburses the FHA-approved lender (LoanMerica) in the event of a default. As you might expect given their purpose ‒ helping lower-income individuals and families enjoy home ownership ‒ the FHA imposes maximum mortgage limits in keeping with the market where you're looking to buy.
An upfront mortgage insurance premium is required at closing of the loan. Along with the monthly mortgage insurance premium, the upfront premium is typically financed into the total loan amount by the lender and paid to the FHA on the borrower's behalf.
If you have a modest but consistent income, an FHA loan might be your ticket to home ownership. To find out more about FHA loans and to see if you qualify, give LoanMerica a call at (800) 391-9310 today. It's another great avenue we provide toward living your dream in your own home.