During the process of purchasing a home, many buyers hear the term ‘FHA.’ What exactly do those initials mean for the consumer? Here are some helpful points to help clarify what FHA is and how it impacts your HOA.
1. FHA stands for Federal Housing Administration. This agency of the federal government exists to ensure good housing standards and access to adequate home financing in America.
2. FHA is an agency of the Department of Housing and Urban Development (HUD).
3. FHA does not provide grants and it does not directly provide loans. Rather, it provides mortgage insurance.
4. FHA mortgage insurance is a promise from the federal government to buyers that the mortgage rates they agree to will remain that way without any unexpected swings or increases.
5. This mortgage insurance is very attractive to prospective buyers who, without such a guarantee, might not be able to purchase a home. For this reason, it is highly advantageous for HOAs to be FHA certified.
6. Not all HOAs desire this certification, but for those that would like to attract first time buyers and young families, FHA is the way to go.