What are FHA Loans?
If you've been shopping around for a home I am sure you've heard the term FHA thrown around casually. To one who is unfamiliar, this may sound confusing, but it's actually a simple term and commonly used in the real estate industry.
So... what is FHA you ask?
FHA stands for Federal Housing Administration and their main purpose is to help communities grow and increase land ownership. But first, we must understand that this type of loan is not for everyone, it is designed to help people in the lower-income bracket to give them the opportunity to participate in land ownership. The way this works is the Administration insures the mortgage so lenders take on less risk when lending. This whole loan process is known as a "FHA Loan", meaning that the loan is backed by the government and provided by the lender to the borrower. Simple!
Like all loans there are certain things that one must qualify for before getting the it. According to bankrate.com, the qualifications for a FHA Loan as of 2020 is as follows:
Now lets get into the Pro/Cons of this type of loan over conventional loans. This FHA loan is great because
The drawback to these types of loans is:
FHA Loans are great loans and give a huge opportunity for people to increase home ownership in United States. In most cases, people who are qualified for these types of loans usually will pick FHA over conventional loans. There are many benefits to this type of loan over others with some minor drawbacks - but great nonetheless. It is important to consult with an attorney or Sofyan Karim (your agent for life!) if you have any questions or want to check if you qualify for an FHA loan.