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Best FHA Home Loans 

You found it! The best FHA home loans from the US Government are described below. Finally a place where you can learn about FHA mortgages that makes sense.

If you're like many people, finding the best FHA home loan is no easy task.

Maybe you even ask a loan officer at a bank or a mortgage broker and they seemed hesitant and tried to change the subject. Does this describe your experience - just a little bit?

Well my dear web visitor, you have landed on the best page (my opinion of course) on the web for FHA government home loan information.

Want to see if you qualify for a mortgage? Click here to find out.

But first allow me to tell you why I believe I can help you with good reliable information on the best FHA home loans.

I have walked in your shoes. Better yet, when I was in the mortgage business I wrote a ton of FHA Loans.

Today, you are going to learn all you need to know about these loans, how they work and where you can find them. This page along with the links at the bottom of it can help you know more about the FHA 203(b) loan than most loan officers know. You will learn exactly how they work after reading these pages thoroughly.

My First FHA Government Home Loan

If you can indulge me for just a minute, let me tell you my personal story and experience with the one of best FHA home loans called the FHA 203(b) loan program. When I was a first time home buyer way back in 1978, I was introduced to the FHA loan program. Did I understand what it was and how it worked? No I did not. Did I care? Not really!

What I did know is it had a very low down payment requirement. At that time it was just 3% of the sales price. Now the price of my home was just $19,000 so the out of pocket down payment I had to come up with was just $570. I also knew that my monthly principal and interest payment would be $122.62. With my taxes and insurance my total monthly payment would $178.00 a month.

best fha home loans explained

Wow! Was I excited. I was paying more than that in rent each month and I was renting from my father for goodness sakes! So I told Dad, see you later, I'm buying my own home using one of the absolute best FHA home loans called the 203(b). This was music in my ears.

I was going to soon have my own 3 bedroom, 1 bath home in a nice neighborhood. This place had a full basement and a fenced in yard. It was close to work and shopping. I was not too worried about the schools at that time since we did not have any children yet. Even though the school district was just fine.

So when it comes to the best FHA home loans, in my mind way back then, it was the FHA 203(b) loan program. The funny thing is, that is still one of the best FHA home loans out there today. Imagine that, some 30+ years later, it stands as one of the most used loan programs for first time home buyers.

Take look at this brief video:

The Best FHA Home Loans Video

Ok, let's get on with it. I just thought I would toss that little video in there to kind of amuse you.

FHA Mortgages Explained

To begin with, you need to realize who is actually loaning you the money. You may be thinking it is the government since this is a FHA government home loan. It gets kind of confusing, but let me try to clear this up for you. I want you to understand why I think this is one of the best FHA home loans out there for you.

The actual lender would be an FHA approved lender. Many times this would be a large national bank. Sometimes it may even be a mortgage broker if they can meet the strict FHA guidelines. At any rate, the money comes from them and the government will give the actual lender a guarantee that you will not default on the loan.

So to help you as the first time home buyer, the Federal Government makes a loan guarantee to that lender. This guarantee becomes a part of your loan contract. Your loan gets assigned an FHA case number to identify it. Can you see now why I think this fits in as one of the best FHA home Loans?

In order to help cover the costs of defaulting mortgages (been a lot of them lately since 2008) FHA will charge you a MIP or better known as mortgage insurance premium. There are two kinds of MIP. One of them is what's called an upfront premium and the other is an annual premium. Let me break them down for you.

  1. The upfront mortgage premium is 1.75% of your mortgage amount. The rate for this MIP used to be 1.5%. Now to figure this...... you take the sales price minus the down payment which becomes your new mortgage balance. Then you multiply that amount by 1.75%. This upfront premium gets added to your loan balance so it does not come out of your pocket at the closing.
  2. The annual premium is also figured on your mortgage amount. Your down payment is used to figure this premium as well. If you put 5% or more down, the premium amount is 110 basis points. If you put less than 5% down, then it is figured at 115 basis points.

Here's the formula to figure it using the same $100,000 sales price for the home:

$100,000 with $5,000 down (5%) the balance is $95,000 times 1.35% equals $1282.50 a year. Then you divide that by 12 months which is $106.88. This gets added to your payment each month on top of your principal, interest, taxes and insurance. Now if you were to put the minimum down payment of 3.5% down it would look like this. $100,000 with $3,500 down (3.5%) the balance is $96,500 times 1.35% which equals $1,302.75 a year. Now divide that by 12 and you get $108.56 a month.

UPDATE: Beginning January 26, 2015, the annual FHA mortgage insurance premium, which is paid monthly has been reduced from 1.35% to .85% saving you money!

Ok, are you still with me?? Good, because what this means to you is that in most cases you may be surprised that you can afford to buy a home. The FHA 203(b) home loan has been around since 1934. This is one of the best FHA home loans out there.

There are other FHA loans but that is a subject for other pages on this web site. So this leaves you with some unanswered questions. Well don't worry, just below I answer them all for you. You will see links that answer questions about the loan requirements and much much more. Take the time to read them over and see for yourself how you fit in.

Hopefully this information helps you see what are the best FHA home loans on the market.

What are the requirements for FHA Loans?
What other items should I know?

Understanding FHA loan requirements is not as hard as you think. Actually, believe it or not FHA loans are the easiest kind of real estate loan to qualify for read why at FHA Loan Requirements.

Are there any costs with a FHA mortgage? Learn what those costs are and if there are any advantages over a conventional mortgage by reading FHA Fees or Costs.

The beauty of a FHA loan is its down payment flexiblity. You can possibly use a gift or other means for your down payment. Find out how this can work for you by reading Use of Gifts for the Down Payment.

Leave Best FHA Home Loans and return to Home Mortgage Information main page.

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