Federal Housing Authority

by Sarah Hikel

Several years ago, a housing boom occurred that caused home prices to skyrocket. As the inflated market increased real estate value, many individuals intent on purchasing property were unable to do so. When the housing bubble finally burst, first-time homebuyers were presented with an opportunity to utilize the financial crash in a positive manner, taking advantage of some of the lowest mortgage rates in history. In the past two years, the federal government has instituted an innovative program to breathe life into the ailing real estate market, offering qualified first-time homebuyers a tax credit incentive toward the purchase of a home. The response to the tax credit initiative has been overwhelming. Although many were able to benefit from the incentive, late filings and a lack of governmental funding kept a number of potential buyers from immediately realizing their dreams of ownership. Currently, the Federal Housing Authority (FHA) is offering loans at 4.25%, with a required 3.5% down payment. In the past, mortgage lenders suggested a down payment of at least 5%, often encouraging buyers to put down as much as 20% if possible. Today, the real estate industry is drastically different from the way it was several years ago; lenders are now focused on innovative solutions for those who are prepared to purchase a home. Buyers who choose to take an FHA-approved loan are in good company, as FHA mortgages now comprise one-third of the market. With the abundance of affordable housing, there has never been a better time to buy. The current FHA mortgage rate is similar to that of a conventional mortgage, but FHA borrowers are eligible for additional state funds that are distributed through grants and bonds. Similar in concept to the first-time homebuyer’s tax credit initiative, FHA loans help facilitate new home purchases and reanimate the real estate market.