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FHA Home Loans

Massachusetts FHA LoansMassachusetts FHA Home Loans

Over 34 Million Homes insured through the FHA mortgage program since 1934 when the program was created.

Compared to conventional mortgages that have tighter underwriting guidelines, FHA-insured loans appeal to a wider range of home buyers by offering easier credit standards, lower down payment requirements and more flexible income calculations.

FHA’s recent “Back To Work Program” has made it possible for borrowers to qualify for a new FHA purchase loan with as little as 2 years out of a recent Bankruptcy or Foreclosure.

FHA Home Loan Basics

The purpose of these loans is that the US Federal Housing Administration can help homebuyers by providing mortgage insurance on your loan. The FHA itself does not actually make the loans, instead they “insure” the mortgages that a traditional lender or bank would make to a borrower. Basically, the FHA helps more borrowers afford to buy homes by giving lenders the assurance they need in the case where a borrower defaults on a loan and is unable to continue making mortgage payments.

Here are a few benefits of the Massachusetts FHA Home Loan Program stands out:

  • Low Down Payment – Even as low as 3.5% down payment, the money used towards your down payment can be a gift from a charity or employer, even just money from a family member.
  • Credit History – You do not need to have a perfect credit, in some cases even after filing for bankruptcy.
  • The FHA has many different options to help prevent foreclosures from occurring due to hard times for homeowners, allowing them to remain in their homes.
  • The interest rates are competitive due to the federal government’s insuring of the loans that helps in the protection of the lenders.

Giving the bank the piece of mind that they are protected from circumstances like this, the bank sees less risk and more opportunities to lend out with lower qualification requirements.

While most people believe that the FHA lends money directly to borrowers, it actually just insures a certain type of loan that is financed by traditional banks and mortgage lenders.

Massachusetts FHA Loan Programs:

Four of the most visible single family housing programs that FHA offers are, Section 203(b), Section 234(c), Section 203(k) and Home Equity Conversion Mortgages (HECM) – Reverse Mortgages.

Section 203(b)

  • Largest of FHA’s single family programs
  • 1-4 unit properties are eligible
  • Flexible credit requirements
  • 3.5% down payment allowed
  • Down payment may be a gift from specific sources

Section 234(c)

  • Provides mortgage insurance for individual condominium units
  • Credit, down payment and limits of 203(b) apply
  • In 2010, condominium complexes must be approved through HRAP/DELRAP to be eligible for FHA insurance

Section 203(k)

  • Primary program for property rehabilitation
  • Encourages community and neighborhood revitalization
  • Only 1 mortgage loan is used for both the acquisition and the renovation
  • 1-4 unit properties including condominiums are eligible; check with your lender for manufactured housing eligibility
  • Required improvements include cost effective energy conservation standards and smoke detectors
  • Consultancy may be required

HECM – Reverse Mortgages

  • FHA was the first to promote reverse mortgages nationally
  • Allows access to equity in property with flexible terms
  • Lump sum, monthly payments, line of credit or a combination available
  • Limited to homeowners 62 years of age and older

FHA programs go beyond the scope of the previously listed programs. They offer a Streamline Refinance as well as a Streamline 203(k) for limited repairs. Also, recent legislation has helped FHA offer special programs with incentives to lenders for modifying and refinancing existing mortgages like with the “Making Home Affordable Program.”

When looking for a loan program to fit your specific needs, take a close look at FHA as their programs have become more attractive to both lenders and consumers.

With favorable loan terms, higher loan limits, 30 year fixed repayment terms and flexible down payment options, FHA will continue to encourage home ownership, provide liquidity and stability to the mortgage market.