FHA Home Loans


Also popularly known as FHA government home loans, FHA home loans are mortgages insured by a United States government agency, Federal Housing Administration (FHA) which lately also started insuring home improvement loans.


During the Great Depression of 1930s millions lost their homes to foreclosures and the borrowers were left with no mortgage refinance option. The worsening banking crisis led to the restructuring of federal banking system in 1934 and the National Housing Act was passed which paved the way for creation of the Federal Housing Administration. FHA home loans came to borrowers’ rescue and provided best mortgage refinance rates. When the US Department of Housing and Urban Development (HUD) was formed in 1965, the FHA started functioning as its efficient arm. With insurance from the US government itself Reverse Mortgage Lenders also chose to jump on the bandwagon and started providing FHA home loans to the savvy borrowers.


Emerging as the best nationwide home mortgage company, FHA has helped millions of single professionals, young couples and first-time buyers to realize their long cherished dreams of owning houses.


What makes FHA home loans and FHA home improvement loans popular is the lack of liability on part of the borrower. The FHA mortgage is insured against the borrower. The FHA makes a commitment to pay the lenders, if the borrower withdraws his liability to pay back the FHA loan. In other words, FHA takes the responsibility to pay off the FHA government home loan, if the borrower defaults. In this case, FHA charges a small fee from the borrower to cover the cost of the insurance.


In the present scenario of tight credit markets and unprecedented foreclosures and defaults, it is the best time to apply for FHA mortgages and buy a home both in rural and high-cost areas.


An FHA loan has its distinctive advantages over a conventional loan. Starting with much lower down payments, FHA loans make it easy to qualify and are fully assumable, which enables you to easily sell your home. FHA loans also have lower interest rates for home refinance as compared to the conventional mortgage. FHA home loans even allow a relative to make the down payment on your behalf by giving loan or gift to you. One can easily get free online mortgage quotes and apply through thousands of Federal Housing Administration approved lenders Nationwide.


In the current housing market, FHA loan programs provide the best answer with its numerous options for the first time home buyers. The government is now considering trying to ease the paperwork further and make it more convenient for borrowers.


According to Freddie Mac, loans worth $ 90 billion were originated for FHA home loans and VA mortgages in the year 2005 and rose to a staggering $ 291 billion in 2008 which is 19.53 percent of the total marketplace. The bailed out giant now projects FHA and VA loans worth $440 billion to originate in 2009 which will push up the share of FHA home loans and VA loans to 28.21 percent of the total marketplace.


FHA Home Improvement Loans

The FHA home improvement loans are a newer form of FHA- approved lending, enabling borrowers to repair or upgrade used or current houses. FHA home improvement loans are given to make the borrower’s life safer or to comply with housing laws and not for decorative purposes. Borrowers can use FHA home improvement loans to in conjunction with traditional FHA loans to purchase a home and make the necessary repairs to make the home safe to live in. FHA Home improvement loans are intended for people who wish to repair their house in order to live safely, but can also be used by investors looking to fix distressed properties. The US government agency, FHA also provides valuable advice on FHA home improvement loans.


FHA Home Improvement Loans have traditionally been very attractive to borrowers with low or moderate income. But, over the years, these loans have been attractive to a wide variety of borrowers. Other people who can benefit from the FHA loans include borrowers:

  • With disputed credit history
  • Residing in rural or high-cost urbanized areas
  • With high loan-to-value ratios
  • Facing a high number of other monthly debt payments
  • Who are first time home owners


More recently, due to a downturn in home sales, a tightening credit market, and increased FHA home improvement loan limits, FHA loans have become the loan of choice for many American families.



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