FHA Mortgage Insurance
The FHA government body is entirely self funded by the mortgage insurance that is charged on each loan that it secures. It is an insurance policy for the banks, and lenders who actually take on the mortgage. FHA guidelines are simply a guideline. If the banks follow it, or stay above the FHA requirements, the mortgage insurance (MI) covers them if the borrower defaults.
Put simply it is a fee, but that does not mean it is bad for the borrower. See the benefits below, even with the MI included, it is still a great direction to go with a home loan.
- Lowest credit scores available for any loan today.
- Lowest down payment – 3.5%.
- Down payment can come from a variety of sources, not just the borrower.
- Same interest rates as any other product, and just as cheap, if not cheaper.
If you don’t have the best credit, and don’t have a ton for down payment, it may be just fine to pay an extra fee to get into your next home, or refinance.