I have been a certified home inspector for 16 years and and FHA Consultant for 10 and I have never before seen a climate that makes FHA loans so attractive for buyers, agents, inspectors and contractors. It surprises me to learn that many people don't even know what an FHA mortgage is. I wanted to share my knowledge and experience with the home that as the adage says "With knowledge comes Power"

FHA (Federal Housing Authority) has been around since 1934 with the express responsibility to help people deal with the various aspects of the homeownership experience. The program that people are most familiar with is the 203b Mortgage (usually referred to as an "FHA" mortgage).

This loan product was popular before the housing boom allowed anyone and everyone to qualify for a conventional mortgage and the pendulum has swung back around to making them the most used loan option again today.

Why?  There are 4 BIG reasons why FHA mortgages make sense in today's strict loan qualifying climate:

1. It is easier to get qualified: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify. While other loan guarantors like FANNIE MAE and FREDDIE MAC are struggling to get investors to accept new loans, FHA guarantees give the lender a comfort level hard to find in this economy. 

2. You can have less than perfect credit or NO CREDIT AT ALL: You don't have to have a perfect credit score to get an FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA loan than a conventional loan.

3. Low Down Payment: FHA loans have a low 3.5% downpayment and that money can come from a family member, employer or charitable organization as a gift. Right now, conventional lenders are back to the 10-20% down requirements of 10 years ago. Most people just don't have that amount of money stored up- especially the first time homebuyer who doesn't have the proceeds of an home sale to leverage on the new purchase. Also, FHA allows the seller of the home to contribute up to 6% of the sales price to help the homebuyer with settlement and closing costs- many sellers are highly motivated and will gladly offer this assistance if it means they can sell their home faster.

4. FHA insured loans can cost less: FHA loans have competitive interest rates because the Federal government insures the loans. If a first time or marginal credit buyer is looking for a way to buy a home usually FHA will be less expensive (and sometimes the only way) than a conventional mortgage rate that builds the risk into the interest rate.

And the BEST advantage of an FHA mortgage- the FHA 203(k) Rehabilitation Mortgage allows a homebuyer to purchase and repair the home with one loan- repairing it AFTER settlement to suit their tastes instead of relying on a seller to correct defects (a seller who is most likely not going to choose the best quality materials or service providers...why should they- they want out and out with as much money in their pocket as they can have.

So as you can see, an FHA insured mortgage is going to be the loan product of choice for all types of borrowers for some time to come. Doesn't it make good sense for you as a home inspector or contractor to learn how you can help these borrowers and keep your revenue stream flowing at the same time?

My next entry will talk about the challenges associated with FHA insured loans and where these challenges create opportunities for business professionals skilled in residential real estate.

If you are a building inspector or contractor who would like more information on how to become an FHA certified inspector/consultant check out www.203kinabox.com for information on the fastest most comprehensive training system in 203k certification.