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If you're a first time home buyer, you may want to check into FHA financing or an FHA mortgage. An FHA mortgage is a special type of loan to buy a house. The federal government insures the loans for lenders in case of default. FHA loans are more attractive to many first time home buyers than a conventional mortgage would be for a couple reasons. First, the buyer doesn't have to come up with as large of a down payment. This is good news for someone that wants to buy a home but doesn't have a huge chunk of money for a down payment. Secondly, because the government insures the loans, the FHA mortgage rates are very competitive.

FHA Beginnings

The FHA was created in 1934 as part of FDR's New Deal. Since then, it has insured over 34 million homes, making the FHA the largest insurer of mortgages in the world. Interestingly, the FHA doesn't cost the taxpayers a cent. it is the only completely self sufficient government agency.

You Can't Buy A Mansion However

A drawback of an FHA loan is that they may available only for properties valued below a certain price. But, you can use a FHA loan to purchase a new or used 1-4 family home, condominium, or permanent foundation mobile home.

Different Types Of FHA Loans

Most FHA loans are of the fixed variety, meaning the interest rate and payment amount stay the same over the life of the loan. Adjustable rate loans are available too, for people that may be a little stretched financially. An FHA adjustable rate mortgage starts out at a lower rate than a fixed loan, but will increase over time. Normally a loan will not increase or decrease more than 1 or 2 percent.

Another program offered by the FHA is a Rehabilitation loan or 203k. This type of loan is for a property you would like to buy that needs a lot of repairs. The loan is for the mortgage, and for the repairs needed. The mortgage amount is based on the projected home value once the repairs are complete.

Where To Find FHA Loans

With the advent of the Internet, it has become easier and easier to find a lender that provides FHA loans. Do your homework, and determine how much you have to put down, and how much you can afford monthly. Then start a search to discover FHA lenders that will work with you to set up a loan that works for your situation.

If you are a first time home buyer without a huge amount of savings, look into an FHA loan. You may be able to get into a house reasonably inexpensively as far as financing is concerned.

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