The Federal Housing Administration (FHA) was created out of the National Housing Act of 1934, and was established to increase home ownership and provide affordable housing opportunities for all Americans coming out of the Great Depression. While most people believe that the FHA lends money directly to borrowers, it actually just insures the mortgage financed by FHA-approved lenders.

Why Are FHA Loans So Great?

FHA loans are by far the easiest mortgage loans to qualify for due to the flexible credit guidelines and the low down payment requirements. A borrower who cannot afford a traditional down payment of 20% or has gone through a financial hardship like a short sale, foreclosure or bankruptcy can benefit the most from the FHA program.

• 3.5% down payment
• Credit scores down to 600
• No prepayment penalty ever
• An FHA loan may also be assumable
• Up to 50% debt to income ratio
• Allows for 6% seller paid closing costs
• Easy to use gifts for down payment and closing costs
• Allows for non-occupying co-borrowers to help qualify
  

• 3 Years from Foreclosure or Short Sale
• 2 Years from Discharge of Chapter 7 Bankruptcy
• 1 Year from Discharge of Chapter 13 Bankruptcy