FHA home loans consolidate the cost of mortgage insurance into the home loan, increasing the premium approximately 1.75%, as an upfront fee with and additional monthly fee of 1.5% This adds a small amount to the monthly mortgage payment. Note that the use of the term "FHA loan" is a misnomer. The Federal Housing Administration serving under the Department of Housing & Urban Development insures home loans. It does not issue the loan or guarantee the loan. Therefore, the FHA insurance-backed home loan minimizes the default risk for lenders. That is especially important when borrowers submit less than 20 percent down payments. Click title for more...
The FHA loan
product is most often used by first-time home buyers and low to
moderate income buyers. FHA approved lenders are authorized to assist
home buyers by taking loan applications processing loan applications,
and underwriting loans, and closing loans.