are more popular
than ever, thanks to their attractive
mortgage rates, low down payments, and
easytoqualifyfor requirements.
To date, the FHA administers 15 types of
mortgage programs for borrowers.
FHA loan programs
FHA 30Year Fixed Rate Loan
FHA Adjustable Rate Mortgage
FHA 203k Loan
FHA 2/1 Buydown
FHA Streamline Refinance
FHA Cash Out Refinance
Some of the more common types of
FHA loans used for purchasing, refinancing or
rehabilitating homes are as follows:
30This is the most common and traditional type of FHAbacked
mortgage for singlefamily homes.
The FHA 30year fixed rate mortgage is ideal for borrowers who:
Intend to stay in/occupy their homes for years to come
Like their mortgage payments to remain the same for
budgeting purposes.
Relatedly, take comfort in the idea that monthly payments will
never change.
FHA30-Year Fixed Rate Loan
ARMthese mortgage loans are characterized by having an interest rate
that changes in the course of the loan. FHA’s umbrella of ARM
programs consists of 1year ARM variant and four types of Hybrid
ARM products.
Types of ARMs
Adjustable Rate Mortgage Loans (ARMs)
1 and 3 year ARMs
5year ARMs
7 and 10 year ARMs
203KThe FHA’s 203k loan program is sometimes referred to as
“home improvement loan” or “rehab mortgage loan”
The 203k loan has two varieties:
FHA 203K Loan
streamlined 203k that allows for not so extensive homerelated projects with costs not exceeding $35,000
standard 203k loan that is intended for structural changessuch as repairing a structural damage and total repairs that
exceed $35,000.
2/1This is applicable to fixed rate
mortgages, whether 15 or 30year
fixed interest rate loans. This
“buydown” allows the borrower to
temporarily pay mortgage payments
at lower rates for the first two years of
the loan.
FHA 2/1 Buydown Loan
If you hold an existing and current (not delinquent) FHA loan and
want to refinance it for lower monthly payments, you may be
eligible for this.
FHA Streamline Refinance involves little paperwork so it speeds
up the refinancing process to weeks and lenders may offer “no
cost” refinancing transactions.
FHA Streamline Refinance
The FHA’s cash out refinance is likened to opening a loan with a
bigger balance than what is currently owed and taking out the
excess proceeds. Borrowers previously can qualify for a cash out
refinance of up to 95 percent of a home’s LTV or loantovalue
amount.
As a cash out refinance is deemed as a riskier transaction
compared to a streamline refinance, borrowers are subjected to
more documentation by the lenders.
FHA Cash Out Refinance
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Information Provided by
Justin Mchood He is Americas Mortgage Commentator
and has been providing Mortgage
commentary for over 10 years
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