Category — FHA

There has been a whirlwind of talk swirling around the Federal Housing Administration (FHA) and its continuous drop below the 2% reserve requirement mandated by Congress. Most economists and financial experts believe the FHA reserves won’t fall below zero. In fact, talk is that the reserve amount even seems to be showing signs of a positive outlook.  

There is a reason why governmental programs and agencies are created. Maybe nothing illustrates this better than the Federal Housing Authority (FHA). FHA is responsible for instituting programs and initiatives that have saved almost a million homeowners from possible foreclosure and financial ruin with its refinance program. This figure doesn’t include the almost two million borrowers that took advantage of bargain housing prices and low interest rates to finance the purchase of a new home, permitting 80% of these buyers to buy their first home—all with FHA secured mortgage financing.  FHA is currently responsible for originating almost 25% of all mortgages originated today.  

In today’s home buying market, FHA Mortgage financing is the way to go.  This is especially true when looking to buy in the Maryland area where the average home price is much higher than the rest of the country.

Doing its part to help stimulate the tumbling housing market, FHA increased its loan limits as highs as $729,750 (in some areas of the country). Now there is talk of making this temporary situation a permanent one. The increase is set to expire at the end of 2009, but experts fear that allowing the size limitations to return to its original amounts may hinder full recovery of the housing and lending markets.  

Historically FHA loans have had more lenient qualifying standards compared to their Government counterparts Fannie and Freddie but with more stringent paperwork and appraisal requirements, they weren’t too popular.

The FHA rehab program must be doing something right because the amount of mortgage applications submitted under the program increased again in June of 2009. The FHA just reported that its 203(k) Home Rehabilitation Mortgage Insurance Program has almost doubled in 2009 compared to the 2008 numbers.