Business, Legal & Accounting Glossary
A government mortgage that is insured by the Federal Housing Administration (FHA). These loans have been insured by the FHA since the creation of the agency in 1934. Since then, various Housing and Community Development Acts have been passed which have slightly altered the laws regarding FHA loans. FHA loans have been particularly helpful for individuals who typically otherwise would not have been able to secure a loan from another source, due to low income or high risk.
An FHA loan is a loan insured by the FHA or Federal Housing Administration. An FHA loan is one type of government loan along with the VA loan, and others. An FHA loan has a mortgage principal limit set by the FHA that depends upon property location. Like any other mortgage, the risk of default on an FHA loan increases as the down payment decreases, yet the FHA allows a very low down payment on an FHA loan because of its mandate to make housing more affordable for low-income and moderate-income families. An FHA loan may be assumable if the property owner changes. Whether or not any restrictions on assumption exist depends upon when the FHA loan was originally obtained. Assuming an FHA loan lowers the cost of purchasing a home by eliminating many closing costs related to financing.
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This glossary post was last updated: 21st November, 2021 | 0 Views.