FHA Mortgage Loans

FHA Mortgage loans are mortgages that are backed by the US Department of Housing and Urban Development.  With FHA loans you are able to purchase or refinance a home with qualifications guidelines that are less restrictive than terms available under programs backed by the so called agencies.  FNMA and FHLMC are backers of mortgages that most people think of when mortgages are mentioned.  Since the Government takeover of the two giant agencies during the economic meltdown in 2008, the rules and regulations applied to the lending mortgage programs have become much more stringent.

FHA mortgage loans have also had revisions to their lending guidelines but they have not been nearly as restrictive as those loans backed by the agencies.  That is why the percentage of FHA backed mortgage loans have jumped in a dramatic fashion when compared to loans backed by FNMA and FHLMC.

FHA offers both Fixed rate mortgage loans and ARM mortgage loans.  ARM stands for adjustable rate mortgages.  These loans carry a lower start rate than the fixed rate loans but will in most cases allow prospective borrowers an ability to qualify for a larger home mortgage.  Of course the potential downside is that it is possible that the lower rate will rise over time and the rate of the mortgage will be above that fixed rate mortgage that they could have selected.

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