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What does FHA mean?

I wanted to know what the difference was between FHA loans, versus regular 30-year fixed rates?
  • February 28 2012 - US
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Answers (4)

" Federal Housing Administration"
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What, Howard's answer wasn't complete enough for you Cheryl?

Did you even bother to read the rest of the question or do you just scan the headlines and post away? 
  • February 29 2012
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Federal Housing Administration
  • February 29 2012
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The Federal Housing Administration is a division within the Department of Housing and Urban Development, a part of our federal government.  The FHA is an insurance company for lenders so they can fund loans with smaller down payments, 3.5% at this time.

The FHA has two charges.  The first is an upfront mortgage insurance premium which is currently 1% of the loan amount after the 3.5% down payment and can be financed.  The second is a monthly mortgage insurance premium which is 1.15% of the unpaid principal balance for 30 year mortgages with FHA's minimum down payment.

Fannie Mae and Freddie Mac provide secondary marketing for lenders to provide conventional financing.  They generally require 20% down payments, but with private mortgage insurance will allow down payments as low as 5%.  These mortgage insurance premiums vary depending on down payment and credit scores.  They are generally less expensive than the FHA mortgage insurance premiums, but they have more strict underwriting guidelines.

I hope this gives you an idea of the difference between FHA insured financing and Conventional Financing.


  • February 28 2012
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Profile picture for shapiroamg

FHA loans are generally a little less than the standard/conventional loans. FHA loans though come with higher mortgage insurance costs though. Great program if you have a min 3.5 to put down and dont qualify for a VA or USDA mortgage

  • February 28 2012
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