A mortgage loan that is guaranteed/insured by the Federal Housing Administration. This means that the federal government will make the lender whole if the borrower defaults on the loan.
It’s an excellent option designed to make homeownership more affordable with a lower down payment than conventional options
This loan has 2 types of fees:
Out of pocket – Paid before the loan closes
Appraisal fee – paid directly to the appraiser. This fee will range between $500-750 depending on the property type and location. You will know what this cost is well before incurring the charge.
Fees rolled into the loan
Up front mortgage insurance premium (UPMIP). This is generally 1.75% of the loan amount and is rolled into your loan. In other words, you do not come out of pocket for this fee. This is required on ALL FHA loans and is paid directly to the federal government.