Government FHA Programs

The Federal Housing Administration (FHA) includes a number of mortgage programs. The most common is the FHA-insured mortgage application. Others comprise assistance mortgage programs. A number of them even include money grants based on a tough amount or a portion of their mortgage. There are applications offered. These comprise no money down, 100 percent funding and another mortgage for a down payment.


The FHA doesn't give money on a house loan. Instead, it's an insurer of the house loan acquired under its programs. Since the loan is insured by the FHA, lenders are usually more willing to extend financing to those who might not otherwise qualify. Also, most FHA-insured loans include low, or even no (in California), down payment requirements. Usually, such down payments don't exceed 3.5% of the sale cost of the house.


Besides the low, or no, down payment attribute, FHA-insured loans also come with a host of other perks. Sellers can credit back up to 6 percent of the sale cost to help pay buyer closing prices. As well, only a 620 FICO (Fair Isaac Credit Organization) score must qualify. Plus, it's possible to secure an FHA-insured loan only two decades after insolvency and three years after a home foreclosure.

Down Payment Assistance Programs (DAPS)

For first-time house buyers, the FHA offers several programs to assist with down payments and closing prices. The first type of down payment assistance involves grants given through nonprofit associations, which are often referred to as 501 (c) (3) groups. Cash given through these programs usually doesn't need any sort of repayment. The second type is given via county, state or city-backed applications. They usually demand repayment through use of a second mortgage.

California-Specific Programs

The FHA provides down-payment assistance applications especially for California. In one program, first-time house buyers can get up to 97 percent financing on a 30-year, fixed-rate FHA-insured loan. The other 3 percent comes out of a second, or sleeping, mortgage which accompanies a simple interest rate. This system depends on availability of state cash. As of July 2010, there is a temporary suspension on these programs because of state budget shortfalls.


Most home sellers will take buyers presenting them an offer backed by an FHA-insured mortgage. Some might not, however, and they're allowed such selectivity by legislation. Always check with the seller's agent or with the seller herself to see if she's willing to accept this kind of offer. In addition, the FHA will only insure mortgages up to some set cost. For example, certain areas in California–such as San Francisco–are insured for up to $730,000.

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