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  • FHA  (Federal Housing Administration) loans are not loans made by the government. They are loans whose guidelines are set by this governmental agency (regarding credit scores, debt to income ratios, down payment requirements, etc.) and then, as long as the lender adheres to those guidelines,  FHA will insure the loans against the possibility of default.  This is in lieu of  using PMI (Private Mortgage Insurance, required whenever you don’t have 20% down) on a conventional loan (meaning not FHA or VA). It enables borrowers to put down as little as 3.5% for a down-payment, while still receiving a competitive interest rate, and even the possibility of a willing seller paying most or all of the buyer’s closing costs. It’s a great vehicle for getting into your own home when you don’t have the perfect scenario of a high credit score, low debt, good income, and substantial savings.  FHA does have lower maximum loan amounts in some areas.

    FHA loans are available as fixed rate loans, adjustable rate loans, and renovation loans.  What many people don’t realize is that you do not have to be a first time homebuyer to use FHA programs.  But you cannot have multiple FHA loans outstanding except under special circumstances.  For instance, if you own a home with an FHA mortgage and feel that it does not make sense to sell it, you can buy a new primary residence using another type of financing, but not with another FHA loan until the first one is paid off (either by selling or refinancing the home).

    If you are interested in purchasing a condominium, the entire condominium project will need to have a special (and current) FHA approval in order to use FHA financing.  Your Realtor or loan officer can help you to find out if a condo project that interests you is on the approved list (or use the link provided on our home page to the HUD site of approved condos.)