The FHA Loan Program originated in the 1930’s, and was part of FDR’s new deal to help the middle class purchase new homes, to stimulate the economy and to help the US get out of the depression. At that tme in our history, the only mortgage loan available to the public was an 80% loan-to-value product, with a 10 year amortization requiring a 20% downpayment. You can see how this situation would severely resrict the housing market.
The changes that FHA brought to the market place were :
- A down payment of 2.5 % (this has increased to 3.5%)
- An amortization of 30 years
- Standardized underwriting guidelnes
- Standardized construction requirements
- A guaranteed national market for the purchase of fha loans.
- The national market was insured by self financing fha insurance on every fha.loan.
- FHA loans will allow the seller to contribute up to 6% of the sellers closing costs and prepaids.
This program revolutionized the housing industry and we are still benefiting from this program today. This program was instituted for the middle class and first time home buyers.
At TST-Harms, Inc., in Jacksonville, FL we are experts doing FHA loans because we’ve been doing them for over 30 years. If you have any questions about FHA Loans, please feel free to call us at (904) 398-4476 – or e-mail us anytime.