Types of FHA Loans

Section 203(b) is the centerpiece of FHA’s single-family insurance programs-the successor of the program that helped save homeowners from default in the 1930s, that helped open the suburbs for returning veterans in the 1940s and 1950s, and that helped shape the modern mortgage finance system. Today, FHA One- to Four-Family Mortgage Insurance is still an important tool through which the Federal Government expands homeownership opportunities for first-time homebuyers and other borrowers who would not otherwise qualify for conventional loans on affordable terms, as well as for those who live in underserved areas where mortgages may be harder to get. In FY 1997 FHA insured more than 790,000 homes, valued at almost $60 billion, under this program. FHA currently insures a total of about 7 million loans valued at nearly $400 billion. These obligations are protected by FHA’s Mutual Mortgage Insurance Fund, which is sustained entirely by borrower premiums.

Section 251 insures home purchase or refinancing loans with interest rates that may increase or decrease over time (adjustable rate mortgages), enabling consumers to purchase or refinance their home at a lower initial interest rate.

Section 245 enables a household with a limited income that is expected to rise to buy a home sooner by making mortgage payments that start small and increase gradually over time.

Section 245(a) enables a household with a limited income that is expected to rise to buy a home sooner by making mortgage payments that start small and increase gradually over time. The increased payments are applied to reduce the principal owed on the mortgage and thus shorten the mortgage term.

The Energy Efficient Mortgages Program (EEM) helps homebuyers or homeowners save money on utility bills by enabling them to finance the cost of adding energy-efficiency features to new or existing housing as part of their FHA-insured home purchase or refinancing mortgage.

Insurance for condominiums, such as is provided through Section 234(c), can be important for low- and moderate-income renters who wish to avoid being displaced by the conversion of their apartment building into a condominium.