What is a FHA Loan? FHA loans are designed to make housing more affordable for first-time home buyers and those with low to moderate income.
Both fixed- and adjustable-rate FHA loans are available, and in most states, an FHA loan can be used for refinancing. The difference is, they’re insured by the U.S. Department of Housing and Urban Development (HUD). With FHA Insurance, eligible buyers can put down as little as 3% of the FHA appraisal value or the purchase price, whichever is lower. Qualifying standards are not as strict and the rates are slightly better than with conventional loans. Convertible ARMs Some adjustable-rate mortgages allow you to convert to a fixed rate at certain specified times. This mitigates some of the risk of fluctuating interest rates, but there will be a substantial fee to do it. And your new fixed rate may be higher than the going fixed rate. Two-Step Mortgages This is an ARM that only adjusts once at five or seven years, then remains fixed for the duration of the loan. Not only will you benefit from a lower rate for the first few years, but the new fixed rate cannot increase by more than 6%.
Related Questions
- What is a FHA Loan? FHA loans are designed to make housing more affordable for first-time home buyers and those with low to moderate income.
- What is a FHA Loan? FHA loans are designed to make housing more affordable for first-time homebuyers and those with low to moderate income.
- Can my Federal Housing Administration (FHA) loan be modified under the Home Affordable Modification program?
