Florida FHA Mortgages

If you do not have the funds to pay at least a three percent down payment requirement to secure a mortgage and have poor credit, then an FHA mortgage may be just what you need. There are numerous lending companies in Florida that offer FHA loan mortgages.

What is an FHA loan?

The FHA or Federal Housing Administration started out in the 1930s during the depression when lenders stopped making loans because a large number of the loans they had were in default. From then on, the FHA has evolved into a support agency for helping the low to moderate income population to become homeowners who do not have the adequate financial resources and a good credit rating to mortgages loan secure a loan. It is governed by the Department of Housing and Urban Development or HUD and is insured by the United States government, but is not issued by them. The HUD requires the borrower to pay a mortgage insurance every month and guarantees the lender of full payment in case of default.

Highlights

Since FHA mortgages are targeted towards the low- to moderate-income population, standards for qualification are less stringent and allow you to obtain a mortgage even with bad credit. The down payment requirement could go as low as one percent when conventional loans usually require 26 to 28 percent and 33 to 36 percent to qualify for a mortgage. Typically, payments will not exceed 29 percent mortgages loan of the monthly gross income and total debt should not be more than 41 percent of gross income.

Terms

FHA mortgages are usually on a fixed-rate mortgage with terms of up to thirty years. Interest rates and points are more or less the same as conventional mortgages. With FHA mortgages, there is a mortgage insurance premium to be paid to the HUD every month. In a thirty-year period, 1.5 percent of loan is paid upfront for the insurance and 0.5 percent of the remaining balance is paid every month.

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