FHA (Federal Housing Administration) Mortgages

The Federal Housing Administration was established in 1934 as part of the "New Deal" set forth by President Roosevelt. Because of the Great Depression, the housing market in the United States was pretty much flat on it's back. Banks were offering financing, but to buy a home they required a 50% down payment. This obviously created great difficulties to the average American who had little if any down payment to offer. The FHA mortgage was created and today, 70 years later, they are still structured primarily for people who don't have a lot of money to put down (first time home buyers).

FHA loans only require a down payment amount of 2.25% percent. As a borrower, the guidelines mandate that you have a minimum of 3% (based on purchase price) of your own funds into the transaction. The 3% can come from gift money from a blood relative or a secured loan if you don't have the funds in a bank account. The seller or a third party can pay any settlement costs over and above the 3% percent.

VA (Veteran's Administration) Mortgages

Veteran's Administration loans are made available to anyone who has 180 days of active service in our Nations Armed Forces. VA loans have been available since 1945 and are particularly attractive since they require a zero down payment. Additionally, the closing costs and pre-paids, (Escrows for Taxes and Insurance) can be paid, by the seller of the home being purchased. This allows qualified veterans to purchase a home with no out of pocket expenses.

Both FHA and VA loan programs are insured and backed by the Federal government. Escrow accounts for taxes and insurance must be set up so that the annual premiums for taxes and insurance are paid along with your monthly payments.

They are excellent loans because they do not have any prepayment penalties AND do not require that you have a credit score for underwriting purposes. They also continue to be the only remaining loan programs that are assumable. This means when you sell your home, a credit worthy buyer can take over the terms of your mortgage and assume the interest rate you have.

Do FHA & VA Mortgages work with
the Energy Efficient Mortgage?

Yes they do! FHA & VA mortgages can be combined with the Energy Efficient Mortgage. The Energy Efficient Mortgage can help lower the operating costs of the home by as much as 30% to 50%. Please refer to the menu on the left to learn more and see actual examples of the Energy Efficient Mortgage at work.