3 Types of FHA-insured Loans

FHA loan form

FHA loan formThe Federal Housing Administration (FHA) has insured certain types of loan – a beneficial arrangement for both loan candidates and lenders of FHA loans.

For loan candidates, applying for FHA-insured loans increases their chances of approval, considering that, by default, these loans have less demanding requirements. For an FHA loan lender, on the other hand, it means the company can sign away deals without having to worry about bad debtors. It’s a win-win situation.

If you are considering FHA-insured loans, you may want to start with these three.

FHA 203k Loan

This type of loan is available to prospective homebuyers looking into purchasing a fixer-upper that would require a considerable amount for renovation. Instead of applying for multiple loans to cover both the house’s market price and its renovation costs, the FHA 203k loan allows an inclusive program. Limited 203k loans are also obtainable by homeowners in need of funding for specific home renovation projects.

FHA Loan for First-time Homebuyers

The subprime meltdown affected many first-time homebuyers, making it difficult for them to access mortgage plans. An FHA loan became their best bet. If you are a first-time homebuyer, this loan will be convenient for you. Compared to other mortgage plans, FHA-insured loans are more lenient. As long as you can provide an acceptable explanation for your less-than-stellar credit score or a previous bankruptcy, you will not be dismissed instantly as financially delinquent and will have equal chances for loan approval.

Home Equity Conversion Mortgage (HECM)

HECM is the government’s answer to reverse mortgage. It is offered to seniors (62 years above) in need of cash assistance. The amount that you can qualify for will depend on your home’s appraised value.

Applying for loans backed by the FHA should give you more confidence. After all, the government has your back with these mortgage plans. This goes without saying that financial duties are called duties for a reason, and that reason should be self-explanatory.