I hear a lot about the Federal Housing Administration, and much of it is simply wrong. “The FHA is the next subprime.” Untrue. “The FHA caused the housing crisis.” Also untrue. There is a lot of misinformation making the rounds, which helps neither brokers nor buyers. Here’s the low-down on what brokers or buyers’ agents need to know.
What is FHA?
The Federal Housing Administration, which was founded in 1934, is part of the U.S. Department of Housing and Urban Development. The FHA insures loans made by the private market; it does not itself lend money. Its purpose is to provide access to safe, affordable financing when the private market cannot or will not participate.
What are the benefits/drawbacks of an FHA loan?
Historically, these loans have featured low down payments, closing costs and credit score requirements.