What is FHA Mortgage?
An FHA mortgage is a home loan insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD). Unlike conventional mortgages offered by private lenders, FHA loans are specifically designed to help individuals, especially first-time homebuyers and those with lower credit scores or limited down payment funds, to purchase homes. One of the significant advantages of FHA mortgages is their more relaxed eligibility requirements compared to conventional loans.
Key Features of FHA Mortgage:
- Insurance: FHA mortgages are insured by the FHA, which means that if the borrower defaults on the loan, the FHA will reimburse the lender for a portion of the loss.
- Loan Limits: FHA loans have maximum loan limits that vary by county and are based on median home prices in the area. These limits are adjusted annually and are higher in areas with higher home prices.
- Property Standards: FHA mortgages require the property to meet certain minimum property standards set by the FHA. These standards ensure that the property is safe, sound, and structurally secure.
Difference between Conventional Mortgage and FHA Mortgage
Two common options while buying any house include Conventional Mortgages and FHA Mortgages. A conventional mortgage is a loan from a private lender, like a bank, without any government backing. On the other hand, an FHA mortgage is insured by the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development (HUD).
Table of Content
- What is Conventional Mortgage?
- What is FHA Mortgage?
- Difference Between Conventional Morgage and FHA Mortgage
- Conclusion
- Conventional Mortgage and FHA Mortgage – FAQs