Local Realtors®
At YOUR SERVICE

( Hablamos Español )

Follow Us

Buying or Selling? Call us today for expert assistance!

Category Archives: FHA

The History of FHA

FHA has helped bolster homeownership in the U.S.

The Federal Housing Administration ( FHA ) was established in 1934 in the midst of the Great Depression. Economic conditions were bleak at that time. Unemployment was at 25%. If someone wanted to buy a home, the lending terms were very difficult, sometimes requiring a 50% down payment, high interest rates, three-year to five-year loan terms, and a huge balloon payment at the end of the term. Only about 40% of all households owned their own homes.

The FHA began by insuring loans for lenders. Because of this insurance, lenders were more willing to extend credit.  To avoid the problems with mortgages in the past, the FHA developed the 30-year fully amortizing fixed-rate loan program. Borrowers were no longer faced with large balloon payments and could be assured that their loan could be paid off at the end of the term. This also provided lower monthly payments for borrowers.

During the 1940s, new FHA programs were developed to help veterans returning home from World War II.  Later, other programs were developed to help the elderly, the disabled and lower income Americans obtain home ownership.

Most standard, conventional mortgage loans today require a down payment between 5 to 20% of the purchase price (95 to 80% loan to value or LTV).  This reduces the risk to the lender in case of default because there is a buffer between the current market value and the amount the lender is putting at risk to lend to the borrower.

FHA is not a direct lender, yet it works with private lending institutions to offer special loan programs that may help people purchase residential properties.  FHA has loan guidelines that are more lenient than conventional loan products, as well as lower down payment requirements, as low as 3.5% of the purchase price.  FHA loans are only for owner-occupied, single family homes, condos, townhomes, or multi-unit homes up to four units. Commercial properties, apartment buildings, or other properties that would not be used as a primary residence, such as a vacation home, would not be eligible for an FHA loan.

FHA loans also removed the requirement for three-year to five-year loan terms with large balloon payments.  Instead, FHA loans instituted 15-year and 30-year loan terms with full amortization, meaning when the loan term ends, the loan is fully and completely paid off.

Filed Under: FHA

LET'S CONNECT

Would you like to find out if you qualify for the purchase of a home? A down payment assistance? Are you interested in having Cornerstone Realty help you to sell your home? Call us today or fill out the form below and we will contact you as soon as possible.

Contact Form

Mortgage Center

We have included below a few tools to help you determine your mortgage payments, closing costs and an estimator of how much you could afford based on your income. To get pre-approved for the purchase of a home, give us a call today or fill out an online inquiry from our website and we will contact you with 24 hours of your submission.

About Us

This Charlotte real estate website provides search tools, information and market news for home buyers and sellers. All the properties displayed on this website are generated automatically from the Carolina MLS and are updated daily.

The down payment assistance programs discussed in this website are based on a 30-year fixed loan. Interest rate is the current market rate.

If you have questions, please contact us today. Your inquiry will be answered by a Realtor® licensed to practice real estate.

Contact Information

Office: (704) 837-4672
Email: info@nc-homeownership.com
Address: 317 Matthews Mint Hill Road, Suite 201 Matthews, NC 28105

Mon-Fri: 9am to 6pm EST
Sat & Sun: By appointment only

Charlotte Real Estate website – We provide Real Estate services to home buyers and home sellers in Mecklenburg, Union, Gaston, Cabarrus and Stanly Counties.

Website Design & SEO by Marketing Elements Inc