The FHA offers five different types of loans for new and existing home owners. These loans are guaranteed by the FHA, but are actually made by traditional lenders who have been approved by the FHA. Since the FHA is “backing” the loan, a lender may be willing to lend to someone who they otherwise would not have. Below are the five type of loans available.
Loans for New Home Owners
First Time Home Buyers
This loan is in place to help those who need a home loan for the very first time. The down payment is as low as 3%. So, if you are buying a $100,000 home, your minimum down payment will be $3,000. This helps individuals who otherwise would not be able to come up with a traditional down payment amount and allows you to purchase your very own home much sooner.
Mobile Home Buyers
This loan is exclusive to those who want to buy a mobile or manufactured home. The best thing about this kind of loan is that a mobile home will be cheaper than a traditional home. This will help you three fold. First, your payments will be lower and you will be able to afford more house for less money. Second, a lower amount will be easier to qualify for. Three, as previously mentioned, you will also have the FHA guarantee to help convince the lender that you should receive a loan for your new home.
“Fixer-Upper” Home Buyers
This loan is for those who will purchase a home that needs some work and repairs. Don’t worry about how you will afford the repairs because the loan will also include the money to make needed improvements. This can make the overall cost of your new home less expensive, since the home will be priced cheaper due to the work needed and fixing the home should cost less than buying the same home in great condition.
Loans for Existing Home Owners
A reverse loan, or reverse mortgage, is a program especially for seniors who currently own their own home. This loan allows seniors to get a big chunk of money that they need, while still being able to keep their home. Someone who takes out a reverse loan will have the option of paying back their loan or the lender will sell the home once the borrower has passed away or no longer uses the home as their primary residence. If the borrow decides to sell the home themselves, they must pay back the reverse loan with the proceeds.
Energy Efficiency Loan
The FHA will also back a loan that you want to take out in order to make your home more energy efficient. What’s more, this will help you save money in the long run, since you will not use as much power from utility companies.
No matter what type of loan you decide on, getting backing from the FHA will help you get a good loan at a rate that is not through the roof. Since you will be using an FHA-approved lender, you can rest assured that you will not find yourself at the mercy of a “predatory lender”.