What is the FHA?
The Federal Housing Administration, or FHA, is part of the U.S. Department of Housing and Urban Development, is a government agency which operates a range of loan insurance programs, but makes no loans and builds no properties.
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Created in 1934 by the National Housing Act, the Federal Housing Administration, or FHA was created to promote home construction and reduce unemployment. Today, the FHA, which is part of the U.S. Department of Housing and Urban Development, operates a range of loan insurance programs, but makes no loans and builds no properties.
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What is the Federal Housing Administration (FHA)?
The Federal Housing Administration (FHA) was created in 1934 by the National Housing Act, in order to promote home construction and reduce unemployment. Today, the FHA is part of the Department of Housing and Urban Development (HUD), and insures both single-family mortgages, and multifamily mortgages under the HUD 221(d)(4), HUD 223(f), HUD 232, and HUD 232/223(f) programs, among others.
What types of loans does the FHA offer?
The FHA offers a variety of loans under its various programs, including the 203(b) and 203(k) loan programs for single-family homes, duplexes, triplexes, and quadplexes. The FHA also insures loans for multifamily and healthcare properties under the HUD 221(d)(4), HUD 223(f), HUD 232, and HUD 223(a)(7) programs.
What are the benefits of an FHA loan?
FHA loans offer some of the best terms in the industry for the acquisition and refinancing of multifamily and apartment properties. These loans are non-recourse, offer high leverage, low interest rates, and lenient DSCR requirements. Additionally, FHA loans are fully assumable, which can be an amazing incentive for a would-be buyer of an apartment community looking to take advantage of an existing loan's lower, fixed interest rates — especially if rates are otherwise climbing.
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What are the requirements for an FHA loan?
The requirements for an FHA loan include mortgage insurance premiums (MIPs), an FHA application fee of 0.30% of the entire loan amount, an FHA inspection fee of 0.50% of the loan amount, and developers are required to pay for a variety of third-party reports, including environmental assessments. Additionally, each property must be covered by property and liability insurance for the duration of the loan, and the first year’s premiums must be paid in full at closing. Evidence of insurance must be provided to the lender on or before the closing date or before the policy’s renewal date.
How do I apply for an FHA loan?
To apply for an FHA loan, you'll need to find an FHA licensed lender and get all your documentation and approval from HUD. It's important to discuss your project with multiple FHA licensed lenders, so you can understand more about the process and the benefits and drawbacks of potential lenders. Additionally, you'll need to get an FHA 221(d)(4) loan, which can be one of the most cost effective ways to finance the construction or renovation of a multifamily residential property.