The Federal Housing Administration (FHA) is an agency within the Department of Housing and Urban Development (HUD) created during the Great Depression. The FHA does NOT issue or purchase mortgage loans. The FHA simply issues mortgage insurance to private investors to insure against borrower default. This mortgage insurance is backed by the full faith and credit of the United States and the mortgage insurance is financed by mortgage insurance premiums (MIP) paid by borrowers.
FHA loans were rarely used prior to 2008. In today’s credit and underwriting environment, however, FHA loans comprise a disproportionate number of newly issued mortgage loans. FHA loans are generally slightly more expensive on a monthly basis than conventional loans and the inspection and appraisal process is a little more bureaucratic, but this is a flexible loan product that has given many prospective homebuyers the chance to buy a home when other options have failed.
Our Product:
*Only 2.25% equity required for a refinance.
**Technically the FHA minimum credit score is 580, but almost no lender in the United States will issue an FHA loan under 640. However, LeaderOne is now offering sub-640 credit score FHA loans but will require 10% down from buyer’s own funds and three open and verifiable credit lines.
***For 15-year loans, annual MIP is 0.50% for LTV > 95%, 0.25% for LTV < 95% and 0% for LTV <= 78%.