History Of The Federal Housing Administration
June 11, 2010
In 1934, the Federal Housing Administration (FHA) was created by the National Housing Act for the primary purpose of insuring long-term residential mortgage loans and, thereby, promoting home ownership in the United States. Today, the FHA is the largest government insurer of mortgages in the world.
FHA loans have surged in popularity. In 2005, government-backed FHA loans represented about 2.8% of total loans originated. Today, the number is closer to 30%. Over the past couple of years, as credit standards tightened, FHA loans have become the loan of choice for many home buyers.
Contributing to the popularity of FHA loans is that the maximum loan amount limit has increased from $417,000 to as much as $729,750, depending on the county in which the home is located. Also, if you qualify for a loan, the loan-to-value (LTV) ratios are potentially higher than those for conventional mortgage loans. With FHA loans, a buyer can borrow up to 96.5% of the value of a home. The potential for a higher LTV also makes FHA loans an attractive option for homeowners wanting to refinance. And FHA loans come with fixed mortgage rates providing stable payments over the life of the loan. Also, FHA closing costs can be financed into the total amount of the mortgage.
Traditionally, FHA mortgages were used to assist first-time home buyers who may not have otherwise qualified for a loan. But FHA loans are no longer just for first-time home buyers. They are increasingly used by move-up buyers. The only restriction is that a purchaser may have only one FHA loan at a time.
5 Comments to History Of The Federal Housing Administration
Comments
obtaining a FHA loan is far simpler than the conventional loan, one has to satisfy some of the FHA loan supplies.
It’s almost surprising to know that FHA loans have gone up to 30%, when it seems more like 70%. The government sometimes drops the ball when the create assistance plans, but FHA was an excellent one because it does not allow lenders to charge whatever amount they want for their fees.
a good brief introduction of FHA
I found a lot knowledge about Federal Housing Administration.
thanks to share with us.
Very well written. I’ve never tried applying for a loan, so it helps to know its history.
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