The Federal Housing Administration (FHA) is operated by the Department of Housing and Urban Development (HUD). The FHA has the responsibility of administering the government insured home loan programs. Like a VA loan, the FHA does not actually lend the money for the home to the borrower but instead insures the loan so that more lenders will be willing to take on the risks of granting the loan to a first time home buyer.
There are many different FHA home loan programs available. One of the most popular is the 203(b) home loan. This particular program is a fixed rate loan for owner-occupied homes and only requires a minimum of 3% down from the borrower. In addition, this particular loan program allows the use of 100% of the closing money to be a gift from a government agency, family member, or non-profit organization.
Overall, the benefits to using an FHA home loan are that the credit requirements for a first-time buyer are less than what might be needed for traditional type loans. In other words, a person or family with some minor credit problems in the past would find it easier to get a home loan through an FHA home loan program than if they tried to go it alone....
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