First time home buyers often have an Michigan FHA Loan program for that first mortgage. It’s one of several options for that first home mortgage. That loan will likely come from an FHA Approved Lender. But what does that mean?
Let’s look at what it means to be an FHA home loan lender.
FHA – the definition
(Federal Housing Administration) FHA is a division of the Department of Housing and Urban Development (HUD). HUD defines FHA’s main activity as the insuring of residential mortgage loans made by private lenders. It sets standards for construction and underwriting. FHA neither lends money, nor plans, nor constructs housing.
Michigan FHA – The benefits
So, the FHA doesn’t issue the actual mortgage loan. The FHA simply provides mortgage insurance which protects lenders like AmeriFirst Home Mortgage. The reason home buyers like Michigan FHA loans is because they have more liberal qualification requirements. Most often they also have lower down payment requirements (as low as 3.5%), lower monthly insurance premiums and often have lower closing costs. This is why buyers are often steered toward an FHA loan. It’s a very attractive loan for the first-time home buyer and for families with low-to-moderate income levels.
How to Become a FHA-Approved Lender
The most recent FHA regulations for becoming an approved lender are only about a year old (May 2010). Here’s a snapshot of the areas FHA oversees.
Nonsupervised Mortgagee: This covers “correspondent lenders” and mortgage lenders who perform: origination, underwriting, purchasing, holding, servicing, and the selling of FHA insured mortgages.
Supervised Mortgagee: These institutions include banks, savings banks, and credit unions who handle all aspects of FHA insured mortgages.
Government Mortgagee: This covers federal, state and local government agencies as well as public or state housing authorities.
Investing Mortgagee: This category is any person or business that wants to handle purchasing, holding, and the selling of FHA insured mortgages. However, this mortgagee type can’t originate or fund FHA loans.
What It Means For You
Being an Michigan FHA home loan lender doesn’t mean HUD or FHA recommends us. It means we meet the requirements set forth to be an approved lender. Here’s a look at FHA mortgage loans serviced by Michigan Mortgage Loans.
You have many other options, including some 100% financing programs like VA loans and RD loans. You can see other loan programs we offer in the Michigan Mortgage Loan Center.