The first establishment of the Federal Housing Administration (FHA) was in 1934. This is the same period when the country was coming out of The Great Depression. Being a branch of the National Housing Recovery Act, the Federal Housing Administration had a simple mission: to provide a platform where the number of homeowners can increase.
The ratio of homeowners at the time was 4 out of 10. Something had to be done in order for that to change.
But there was a limiting factor risk. There was the unavailability of enough quantity of private capital. Homeownership comes with a variety of advantages, which include facilitation of both economic and social growth, shaping the communities and provision of stability to the neighborhoods.
At the moment, the Federal Housing Administration is considered to be the largest mortgage insurer in the whole world. ‘Insurer’ is used in the place of ‘lender’. The reason for the FHA being a mortgage insurer instead of a mortgage lender is because the FHA doesn’t lend money, but instead insures it. They take the risk.
Mortgage lending procedures are facilitated by the FHA by ensuring all the banks and mortgage lenders from the risks that may be associated with giving a loan to an applicant that is buying a home for the first time or people that want to come off a big derogatory credit score issue.
One of the greatest achievements of the Federal Housing Administration is that is has enabled uncountable citizens of America, possibly your grandparents, parents or even you included, to purchase their slice of the American dream.
The Federal Housing Administration has an estimate of 4.8 million home mortgages to single families currently, and over 13,000 insured mortgages projects to different families in their portfolio.
The FHA principles that have been guiding it from inception to date are still intact.
It only requires a 3.5% down payment
Today, available to the home buyers are only few mortgage options that allow them a down payment of 5% or even less. The Federal Housing Administration is among the few.
The FHA mortgage allows home buyers to pay as low as a 3.5% down payment. Isn’t this good news? This is really beneficial, especially for the home buyer applicants who are not rich, wealthy or have not saved up a lot of money to be used as down payment. This is also of benefit to the home buyer that looks forward at saving up more money that will be used for his or her moving out expenses, renovation funds, emergency money or any other needs known to the home buyer.
Flexible credit qualifications
It is not often that you will come across mortgages that you are eligible for with a 580 credit score requirement.
For home buyers that have major derogatory credit issues like foreclosure, bankruptcy or short sale, the only option left for you to buy is FHA.