One of the most popular home financing vehicles, the FHA mortgage is a cornerstone of the housing industry, and one of the most popular options used by LGI Homes homebuyers.
In this article, we’re going to talk in-depth about the FHA home financing program: what it is, how it works, and how it can help you achieve your dream of homeownership.
What does FHA stand for?
FHA is the acronym for the Federal Housing Administration, which is a division of the well-known Department of Housing and Urban Development (HUD). Initiated in the 1930s, the FHA works with entities throughout housing industry, to sustain quality housing, and to ensure that all Americans have access to financing for the purchase of a home.
How does the FHA help homebuyers?
Although the FHA doesn’t directly loan money to borrowers, it is an integral part of the home purchase process for many buyers. As an insurer of mortgages, the FHA takes on the responsibility of reimbursement if a borrower defaults upon (fails to pay back) a loan. This insurance allows lenders to make more loans to more borrowers, regardless of perceived risk. In other words, thanks to the FHA, borrowing money to buy a home is less expensive and easier to obtain than it otherwise might be for millions of Americans.
How can the FHA help me?
One of the hallmarks of an FHA-backed mortgage, besides its more reasonable fees and greater financing options, is that it allows for low-to-no downpayments upon purchase. FHA loans can also allow you to borrow money to pay for closing costs (which are typically paid up-front, at the time of purchase), making it easier to purchase a home without years of cumbersome saving for a downpayment and closing costs. This allows families who can easily afford a mortgage’s monthly payments to purchase a home without having to wait years until they can save up enough to buy their home.
Can anyone use an FHA-backed loan to buy a home?
While FHA guidelines for qualification are very generous, there are some people who will not meet the necessary qualifications for borrowing with FHA. LGI Homes’ preferred lenders are only too happy to review your financial situation with you, to help you determine whether or not you meet the qualifications for an FHA-backed loan. To learn more about FHA, and to be put in touch with an LGI Homes preferred lender, you can visit your nearby LGI Homes community, or contact us online.