FAQs

How Does a FHA loan work, and is it Assumable?

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how does an fha loan work?



The U.S. Dept. of Housing and Urban Development offers a variety of loan insurance programs through the Federal Housing Administration, which requires approximately 3 to 4 percent cash down. There are no income requirements to qualify for an FHA mortgage. Other advantages are that FHA loans do not contain prepayment penalties and in some cases they are assumable by qualified purchasers.


FHA loan limits vary, depending on the county where the property is located. FHA loans are originated and serviced by private lenders.
FHA does not lend money. The mortgage is made by a bank, savings and loan, mortgage company or other FHA-approved lender. In addition, FHA does not set the rates and points.


 

are fha loans assumable?

FHA Loans are only assumable if there is a “subject to transfer” clause in the loan.  Look to your loan agreement for specific terms. In addition, you should discuss any risks with your lender, and possibly consult an attorney before signing the final agreement.