History of the Program
The National Housing Act of 1934 created the Federal Housing Administration, which was established during the Great Depression when the rates of foreclosures and defaults had risen sharply.
This program allowed lower income Americans the ability to afford homes while at the same time being a self supporting government backed loan that allowed banks to lend without the worry of major default.
Help people realize the "American Dream" of homeownership
Stabilize and Revitalize Communities
Promote Economic Growth
Reduce Defaults/Preserve Neighborhoods
3.5% Down Payment
Government insured loan
Loan can be manually underwritten
More lenient FICO score and debt to income ratio.
More lenient guidelines on borrowers collection accounts, prior bankruptcies, foreclosures and shortsales.
More lenient seller contributions of up to 6%
Gift funds allowed
Non-occupant co-borrowers allowed
Flexible Credit Guidelines
FHA loans are known for being flexible with credit. If little credit history exists, the borrower must obtain either a Non-traditional Mortgage Credit Report (NTMCR) or Independent Verification of Non-Traditional Credit Providers. A buyer may have credit scores in the low 600's or a previous foreclosure, short sale, or bankruptcy. Therefore, for these reasons, buyers purchasing a primary residence should explore this product.