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FHA MORTGAGES

The FHA loan is a government sponsored mortgage, created by the Federal Housing Authority. Mortgages can be obtained in the form of either a 30 year fixed rate mortgage or a 1 year ARM. While it is marketed toward First Time Home Buyers the FHA loan is available to anyone.

While it typically has a higher interest rate than a conventional loan it does offer some non-conventional options. Rate is usually not the reason someone chooses a FHA loan.

The FHA loan is one of the few programs that allows for all the downpayment funds to come form a gift. It is also one of the few programs that allows a non-occupying co-borrower to have 100% of the income needed to qualify of the loan. If these two scenarios do not apply to your situation you will most likely be able to find a better program with conventional offerings.

THE BENFITS OF AN FHA LOAN
* Allows 100% of downpayment to come from a gift.
* Allows the borrower to roll the closing costs into the loan.
* Allows a co-borrower to have 100% of the income used to qualify for the loan.
* Allows for streamlined refinancing in the future.

THE DETRACTORS OF A FHA LOAN
* Typically charges a higher rate the conventional programs.
* Mortgage Brokers typically pay their Loan Officers a higher commission on FHA loans and therefor loan officers may recommend them when it may not be the best program for the borrower.
* Mortgage Insurance is significantly more expensive than conventional loans.

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