FHA Loans

An FHA loan is a federal assistance mortgage loan. The loan itself is insured by the Federal Housing Administration, as opposed to a private mortgage insurer. The loan can be issued by any federally qualified lender or bank.

This type of loan has historically allowed Americans who have lower level incomes to borrow money to buy a home that, otherwise, they would not be able to afford or purchase. The idea for the program came about during the Great Depression when foreclosure rates and mortgage defaults increased sharply. The program, originally, was intended to provide lenders with sufficient insurance to be able to make loans. While some FHA programs were subsidized by the government, the goal was always to make the entire program self-supporting based on the mortgage insurance premiums paid by borrowers or debtors.

With the advent of private mortgage insurance companies, the FHA has refocused its efforts on low-income Americans that cannot afford a down payment and so would be otherwise barred from buying a home.

The FHA, or Federal Housing Administration, does not actually make loans. Instead, it insures the loans that are made by private lenders. To obtain an FHA loan, a potential borrower needs to contact several banks or mortgage brokers and see if they originate FHA loans. Contacting multiple lenders is important because each lender gets to set their own rates and terms.

Overall, the FHA mortgage insurance program helps low and moderate income families become homeowners by lowering the initial costs of a mortgage. FHA mortgage insurance also encourages lenders to make loans to otherwise credit-worthy borrowers and projects.

Contact a Boston Bankruptcy Lawyer

If you are in a dire financial situation and are concerned about losing your home, contact the Boston bankruptcy lawyers of Joshua Spirn & Associates at 1-800-975-5346 to discuss the options for avoiding foreclosure and to determine the best plan for you.