FHA Government Notes

FHA government home loans are Federal Housing Administration loans that began in the 1930's to resolve the economic problems that plagued the nation from the Great Depression. The purpose of these funds was to encourage wider homeownership, to improve housing standards and to create a better method of financing mortgages. The FHA government home loan has achieved all of these purposes since its inception and even gone beyond them. This was all accomplished without granting a single amount, as this lending is not made directly by the federal government.

FHA lending is made possible using federal credit to insure the mortgage funds. While this program was rejected at first by many lenders, it is readily available to a large number of borrowers. Even in the tightest money markets, there has always been funding available for FHA government home loans. This type of lending first became available in 1934. The housing market had been financed for 50%-60% of their sales price on a first mortgage of three to five years, with a small second and even third mortgage at increasingly higher interest rates. A FHA government home loan introduced a better way.

By offering to insure borrowed funds up to 80% of value, the lender is able to insist that the down payment be made in cash, permit no secondary financing, and command a moderate interest rate. FHA government home loans were for long terms, up to 20 years at first, and fully amortized over the term. Each monthly payment included a premium to cover the cost of mortgage default insurance. Most of the features of the FHA government home loan were later implemented in the VA guarantee program which services veterans and their spouses. Fortunately, even through federal programs, God provides help for those who need it. "Our soul waiteth for the LORD: he is our help and our shield" (Psalm 33:20).

Today, this program offers a borrower the opportunity to purchase a home with only 3% down. Conventional loans still require 10%-20% as a down payment. FHA government home loans also allow the borrower to wrap the closing costs into the mortgage. Closing costs are typically the responsibility of the buyer, unless otherwise stated in the purchase agreement. The Federal Housing Administration currently has over 50 different programs in its portfolio of assistance to borrowers for homes, improvements, nursing homes, mobile home parks, multifamily projects, and land developments. FHA government home loan programs have also helped members of the armed forces, disaster victims, and those interested in urban housing renewal. Consumers can find more information on the Federal Housing Administration's website and also through local real estate agents.

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