In the not so distant past, getting a loan for a mortgage was as easy as opening a bank account, just about anyone could do it! Those days are long gone, there are only two types of mortgage loans left; the loans that are for the people with impeccable credit scores and can afford a large downpayment, and the loans that are backed by the Federal Housing Administration (FHA). The FHA loans haven’t been seen since the 1930’s and weren’t very popular back in the day, however, nowadays they are necessary.

The FHA will insure the mortgage loans owned by the bank with an upfront fee and a monthly premium, however, your credit does not have to be shiny and the down payment can be as low as 3%. The low down payment is the attraction to this type of loan, which is why many are calling the FHA loans the new Subprime Mortgage. Unlike the subprime market, however, employment and income will be verified to ensure that the mortgage can be covered.

In the past, FHA backed loans only covered 3% of the mortgage loans, but today they are controlling 1/3 of the market.