FHA loans

Historically, Government loan programs such as FHA (Federal Housing Administration)loans fell out of favor in California during the real estate boom market for a few reasons.   One was the rise 100% financing that was offered by almost every bank and mortgage brokerage.  But also, the maximum loan amounts allowed by FHA during those booms years in many areas was far less than home prices, eliminating FHA loans as a viable options for home buyers.

In the last few years, FHA has increased their loan limits and have come roaring back as a very viable loan option for more than just First Time Home Buyers.  As convential lending guidelines continue to tighten, more and more home buyers and even homeowners, may opt for the FHA loan.  Click here for more information on FHA Guidelines.

There is still the misconception that FHA loan programs are designed just to help credit worthy low-income and moderate-income families who do not meet the requirements for conventional loans.   But with the NEW FHA Loan limits in California, FHA may be the preferred choice for higher income buyer because the FHA Guidelines are less restrictive than for conventional loan products.  And with loan limits in higher cost counties as high as $729,750 for a single family residence and loan limits of $1,403,400 for a 4 unit property, it can hardly be said that FHA is only for low-to-moderate income families anymore.   FHA loan limits vary by county.

FHA loans are not funded by the Federal Housing Administration (FHA), which is a federal agency within the U.S. Department of Housing and Urban Development (HUD), but these loans are insured by FHA. The FHA provides lenders protection through up front mortgage insurance (UFMIP) premiums as well as a monthly mortgage insurance premium. If a borrower should default on his or her loan obligations, FHA will come in to cover the loss.