FHA is the Federal Housing Administration. FHA Loans are Loans insured by FHA. In 1934 FHA was created. It’s purpose? To stimulate home construction, reduce unemployment & offer loan insurance unavailabe after most lenders fell victimn to the great depression. FHA provides insurance on the balance of the loan from the lender so if the borrower doesn’t pay the lender get’s paid. FHA’s importance now is much like time following the great depression when lending was for the most part dried up.
There are several groups of FHA loans available today.
If you have an existing FHA loan you may be eligible for an FHA streamline refinance. A loan does not need to be an FHA loan to refinance into an FHA loan. A major factor for FHA loan’s popularity is that FHA loans allow the purchase of a home with very little money down but only if you have the income to support the payments. Another benefit of FHA Loans are $8,000 first time home buyer tax credits appplicable toward closing fees available as part of the stimulus package until later this year.