During the Great Depression in the 1930s, huge numbers of Americans lost their homes to foreclosure. Homelessness is not only terrible for the families living it but also for the overall economy. Hungry, sick individuals cannot go to school or work, empty neighborhoods invite destructive crime, and, of course, as home prices drop so does the total value of the economy. Seeing these disastrous results, the federal government instituted many policies and programs aimed at eliminating this kind of mass poverty. In the wake of the global financial crisis that began in 2008, these programs are suddenly very relevant again. One form of assistance that has become particularly important is granting an FHA loan in Sacramento.
FHA Loan Basics
The Federal Housing Administration (FHA) is one part of the U.S. Department of Housing and Urban Development. The FHA helps individuals and families who probably would not have a high enough income to qualify for traditional mortgages gain access to funding to buy their own homes. One major benefit of FHA loans are that they require a lower down payment—as low as 3.5% of the home price—and most closing costs and other fees can be included in your loan payment. This is a tremendous help to people who would never be able to earn enough disposable income to save up the funds required for a standard down payment.
How Does It Work?
After the recent collapse of the housing market, a sensible buyer should be skeptical of any loans that seem too good to be true. How can low-income families get access to loans with so little down and such good interest rates? This system works because the FHA pays insurance on your loan. The FHA has a list of banks and mortgage companies that it has already approved. When these financial institutions set up a loan with an individual that presents greater risk, the FHA helps establish an insurance program to cover those risks. The insurance premiums, as well as the loan terms, are both based on a set of eligibility criteria. To determine whether you qualify for an FHA loan in Sacramento, set up a meeting with an FHA-approved mortgage company or similar financial institution. You may be surprised at how close your dream home could be to reality.
