FHA Interest Rates

By: EconomyWatch Content   Date: 5 November 2009

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The FHA interest rates are interest rates applicable on mortgage loans that are insured by the Federal Housing Administration (FHA). The FHA itself does not provide the loans. Instead, it insures the loans issued by the federally qualified lender. If the borrower defaults, the lender can seek compensation from the FHA. This lowers the lender's risk and makes the lender more likely to issue a loan.

The FHA was established in 1934, and joined the Department of Housing and Urban Development in 1965. The organization has insured more than 35 million home mortgages since then. FHA helps families acquire their dream homes by making it easier to obtain mortgages.

Typically, the rate is calculated based on components, such as:

  • Mortgage length
  • Interest
  • Loan amount
  • Annual tax
  • Annual insurance

The data for the following components are computed:

  • Monthly principal and interest
  • Monthly tax
  • Monthly insurance
  • Total monthly payment

FHA Interest Rates: Charges

FHA rates are the most suitable for low- to moderate-income level groups, and include the following charges:

  • Appraisal fees
  • Inspection fees
  • Credit report charges

 

FHA Interest Rates: Types of Mortgages

Graduated Payment Mortgage: This type of mortgage is suitable for the mid income group that is looking for an affordable home. The rate depends on mortgage calculator results, the payment plan, monthly installments and the principal amount that is paid to the lender.

FHA Mortgage loan: This type of mortgage is for people who do not have a high source of income and want to opt for transfer of home ownership. The initial payments are low, but they gradually increase with time.

FHA Fixed Rate Loan: FHA offers the fixed rate loan to enable people from the low income group to afford a home.

FHA Loans for Condominium Units: This type of loan enables prospective homeowners to buy a home in a condominium.

Growing Equity Mortgages: The FHA growing equity mortgage loans are a great option for the first-time buyers. These FHA home loans are designed to help the buyer while he is not in a position to pay the monthly installments. These loans are the best for low income group home seekers and for the youth who are still chalking out their careers.

 


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