After the sub-prime mortgage industry died down, the FHA home loan program became the scapegoat for any and all problems associated with the housing market. An FHA loan is a loan that is guaranteed by the Federal Housing Administration. Lenders are insured against loss when they make loans to people who otherwise would not qualify for a mortgage. A protection that has always existed on FHA loans is the required mortgage insurance. Mortgage insurance provides benefits for both the homeowner and the lender. This type of insurance helps the lender because it ensures that they will be paid in case of borrower default. Many prospective homeowners and mortgage professionals have heard that the regulations for FHA loans are changing. Yes the FHA has decided to make some significant changes to its qualifying requirements for its home loan program.

Today FHA loans have become a primary source of home loans because of easier guidelines to qualify relative to a conventional mortgage. FHA loans are actually easier to get than other loans. The Federal Housing Administration has now implemented a new under writing system that expedites the process and makes it a easier process for everybody.FHA mortgages have increased their market share to 30% of all purchase home loans and more than 20% of refinance loans. A popular benefit of FHA financing is the allowance of home seller contributions to the borrower’s closing costs.

One of the most significant advantages of FHA guaranteed loans is the very low down payments required. Generally only 3% is needed, as opposed to 5-20% for conventional loans. Plus, with a FHA loan, 100% of this down payment money can be a gift from a relation, or nonprofit organization, which isn’t always the case with conventional loans. The FHA loan programs are a great opportunity to qualify for a purchase that may have been difficult without the support of the FHA.

Determine the length of the loan there are many new types of loans available for financing your new home purchase. You have a few options such as 15 years, 20 years or 30 years. There are even some circumstances when the loan can be set for 40 years. This is how long the lender sets for the term of the loan. A shorter length of the time will give you higher monthly payments, but less interest will be paid. Decide on the type of mortgage. A fixed-rate mortgage is the most common with a fixed interest rate over the life of the loan. In the United States you have the option of a government insured FHA loans or a VA loan available to veterans who have served in the U.S. armed services.

Your typical loan payment includes interest and principal. With time, the principal is paid down. Other factors affecting your payments might include the option to pay interest only for a certain period. This will allow you to make lower payments but doesn’t reduce the size of the loan.

A negative amortization loan allows you to pay less than interest-only. This type of loan offers the lowest possible payment for a minimum number of years. A hybrid loan is a type of loan where the terms are fixed for a certain period but payment options vary. A 30 year fixed loan that allows interest-only payments for the first 10 years is a hybrid loan. An Option ARM mortgage loan is complicated. They are adjustable rate mortgages with the options of a payment and interest variety.

Piggyback or combo mortgages are first and second mortgages combined. Borrowers take out two loans if they have less than the 20% down. Another type of special mortgage loan is the bridge/ swing loan. With this type of loan the seller uses the equity in the first home to buy another home. A Reverse Mortgage is available for anyone over the age of 62 who has enough equity in their home. The lender makes the monthly payment to the borrower as long as they reside in the home.

Many mortgage loans come with a prepayment penalty. You must make this payment if your loan is repaid too quickly. If you have a prepayment penalty in the original loan you will have to pay a penalty according to the terms of the loan. You may be allowed to cash out on the equity in your home. The value of your home rises over time allowing your use that equity for financial needs. Many mortgage loans are available for real estate investors. Using 100% financing for single-family homes gives the investor leverage. Lenders restrict the total number of properties an investor may finance.