FHA Loan is a federal assistance Mortgage loan in the United States insured by the Federal Housing Administration. The loan may be issued by federally qualified lenders

Why FHA Loans?

FHA loans have historically allowed lower income Americans to borrow money for the purchase of a home that they would not otherwise be able to afford.

The program originated during the Great Depression of the 1930s, when the rates of foreclosures and defaults rose sharply, and the program was intended to provide lenders with sufficient Insurance. Some FHA programs were subsidized by government, but the goal was to make it self-supporting, based on insurance premiums paid by borrowers.

Over time, private Mortgage Insurance (PMI) companies came into play, and now FHA primarily serves people who cannot afford a conventional Down Payment or otherwise do not qualify for PMI insurance.

By March of 2008, that limit was bumped to a minimum of $417,000 or 125% of median sales price, whichever is greater, with a top end of $729,750.

If your Credit is less than perfect, FHA might be the loan for you. You may qualify for an FHA loan even though you have had financial problems.

    - FICO scores can be lower than those for a Conventional loan.

    - Bankruptcy. You can obtain an FHA loan two to three years from the date of your bankruptcy discharge, as long as you've maintained good credit since your debts were discharged.

    - Foreclosure. If you keep your credit in excellent shape since a foreclosure, an FHA loan will be available to you two to three years from the final date of your foreclosure.

Today's terms are pretty straightforward. In fact, in many markets the rates and terms are better than those for 80% / 20% Piggyback loans.

    - There is little or no Adjustment to the Interest rate for an FHA loan, as the rates vary within .125 percent of a conventional loan.

    - Mortgage insurance is funded into the loan, meaning a premium of 1.5% is added to the loan balance instead of being paid out-of-pocket. In addition, a small portion for the mortgage insurance premium is added to the Monthly payment, but it is far less than private mortgage insurance premiums.

    - Borrowers can finance 97% of the Purchase Price and put down 3 percent. In some instances, when combined with other types of loans, the down payment can be zero.

    - Allowable Debt ratios are higher than the debt-ratio limits imposed for conventional loans.

A VA loan is a mortgage loan in the United States guaranteed by the Veterans Administration. The loan may be issued by qualified lenders.The VA loan was designed to offer long-term financing to American veterans or their surviving spouses (provided they do not remarry). The VA loan allows veterans 100% financing without private mortgage insurance or 20% Second mortgage.

A VA funding fee of 0 to 3.3% of the Loan amount is paid to the VA and is allowed to be financed. In a purchase, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less. In a Refinance, veterans may borrow up to 90% of reasonable value, where allowed by state laws.