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FHA Mortgage Insurance
Federal Housing Administration
The Federal Housing Administration, also known as "FHA", provides mortgage insurance on loans given by FHA approved lenders across the United States and all its territories. The FHA insures mortgages for a single family, multifamily, manufactured homes and hospitals. It is the largest insurer of mortgages worldwide.
The lenders have less risk because FHA will pay the lender if a homeowner stops paying on their loan. Loans must meet certain requirements established by FHA to qualify for insurance. FHA mortgage insurance protects lenders against loss, if the homeowner defaults on their mortgage loan.
Unlike conventional loans, FHA-insured loans require small down payments. There is more flexibility in an FHA loan than conventional loans in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property-whichever is longer.
Ask your Real Estate, Bank or Loanagent for more on FHA insurance mortgages