FHA

FHA loans are a government-backed loan designed for people who have mediocre credit scores, a small amount of cash for a down payment, or are overextended on credit – but otherwise can afford to make a mortgage payment. The loans are backed by the Federal Housing Administration (FHA), under the Department of Housing and Urban Development (HUD). Preset spending limits are the hallmark of an FHA mortgage. The loan amounts are set by the median prices of a home in different cities within a particular area. The difference in loan amounts between rural and densely populated areas can vary by several hundred thousand dollars. The best part about an FHA loan is that you generally can have a lower down payment towards the purchase of your home than other loans. But FHA loans may be more expensive. All FHA loans carry mortgage insurance (also known as MI), even if you put down more than 20 percent on the property. FHA loans are assumable. That means that if you sell your home, your buyer can potentially assume your loan and you would be released from the loan.