ARIZONA DAILY STAR:  Tues., Oct. 23, 2007

Mortgage crisis gives new life to once-handy FHA loans

Real Estate by Christie Smythe

 

Federal Housing Administration loans, which fell out of favor during the red-hot real estate market of years past, are becoming more alluring to real estate agents and mortgage professionals looking for ways to keep transactions flowing.  The FHA program was established in 1934 to help moderate-income Americans purchase homes, according to the U.S. Department of Housing and Urban Development. The Federal Housing Administration doesn't provide mortgages, but rather insures them against default.

The mortgages insured by FHA have more flexible underwriting guidelines than conventional loans, allowing borrowers with limited or spotty credit histories to purchase homes under certain conditions, according to local mortgage brokers.  The mortgage program also allows for a down payment of 3% of the purchase price instead of a more onerous 10% or 20% for most conventional loans, local mortgage brokers said.

There are strings attached. FHA borrowers must pay for FHA insurance in addition to the principal and interest. Until about a year ago, the program was also considered burdensome to sellers because it required the condition of the property to meet strict criteria, local mortgage brokers said.

            Loan amounts are capped at $239,850 in Pima County.

FULL STORY:   http://www.azstarnet.com/allheadlines/207682