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Fha New Construction

FHA new construction mortgage insurance is one of the primary reasons the American home loan system operates with any semblance of success. The Federal Housing Administration (FHA) provides mortgage insurance on home and other loans made in the United States. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.

FHA new construction mortgage insurance is not a given. In order to qualify, the home or property owner must take out a mortgage loan with a bank approved by the FHA. Those who do not will automatically be declined. Unlike conventional loans that adhere to strict underwriting guidelines, FHA-insured loans require very little cash investment to close a loan. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In many cases, the payment is simply becomes part of the monthly mortgage and is largely overlooked. The FHA mortgage insurance is taken off the loan after five years or 78 percent of the loan is repaid, whichever is longer.

The FHA has a number of new construction requirements in order to be eligible for mortgage insurance. The FHA new construction requirements include a copy of the building permit; a certificate of occupancy; a subterranean termite soil guarantee from the builder; a warranty of completion of construction; the builder's certification of plans, specification and site; carpet identification; an insulation certificate and a photo from the appraiser's final inspection. If these steps and a number of others are not completed and submitted to the FHA, the mortgage insurance will not be extended.

The FHA is the only government agency that operates entirely from its self-generated income and costs the taxpayers nothing. The proceeds from the mortgage insurance paid by the homeowners are captured in an account that is used to operate the program entirely. With FHA new construction mortgage insurance, homeowners who didn't think they had a chance at having a place of their own are now in a home.

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