An Anatomy of the FHA Mortgage Loan in 2016-2017

The FHA mortgage loan in 2016 and 2017 is similar to years past, but each year the requirements and stipulations change a bit, and it is good to be aware of how things currently work.

FHA loans do not originate with the FHA, or the Federal Housing Administration. The FHA simply insures against the borrower defaulting, thus making the loan safer for the lender. It also enhances the ability of the borrower to get a loan with an approved FHA lender.

One great advantage of a borrower utilizing an FHA loan is the fact that the borrower only has to put a 3.5% down payment on the loan. So for a $200,000 loan amount, that is a $7,000 down payment. Compare this to most commercial mortgage loans that might require a 10% or a 20% down payment, and you can readily see the value of using an FHA loan.

Obtaining an FHA loan is not a free pass if an individual has a bad credit history. It is possible to establish credit for an FHA loan if past credit difficulties have been rectified, and if the individual has a steady income with a good job.

FHA loan lending limits will vary from city to city and from state to state. You can check with your local FHA approved bank, or go online at FHA.com to learn what the limits are in your jurisdiction. The limits will vary also by type of dwelling, whether it is a single family or a duplex, triplex, or a four-plex.

The main mission of the FHA is to assist borrowers in the process of obtaining the amounts of the loans that they qualify for, and to assist lenders in the reduction of their risks in the issuance of loans to borrowers.

The FHA mortgage loan asks for a lot of information, and if this is the first time you have applied for a mortgage loan, it will pay off for you to learn how to pre-qualify for a loan with the FHA. As a matter of fact, it would be good for anyone applying for an FHA loan to do the same thing.

One thing that should be kept in mind when applying for an FHA loan is to avoid making major credit purchases. This is just not the time for doing that as it can really cause disruption in the FHA formula. You do not want to add any extra obligations at this time, as you need to be as clean with your credit as possible.

If your credit score is cloudy, you should work on improving it for at least one year before you apply for an FHA loan. There are ample facilities available for you to know in advance what your chances are for obtaining an FHA loan. Most of the major banks and lending institutions can help you in this area.

Just be sure that you are dealing with a major lender so that predatory lending practices are not something you have to deal with. Just remember, if it sounds too good to be true, it probably is.