Why is the interest rate on a FHA mortgage loan lower than a conventional mortgage loan?

Posted on Aug 6, 2012 in FHA Information

Question by mann2641: Why is the interest rate on a FHA mortgage loan lower than a conventional mortgage loan?

Best answer:

Answer by tommy
FHA is funded by the goverment to make loans more afordable for first time homeowners..But the house you pic has to meet certain standards.. so you dont get stuck in a lemon..highly recomended as long as they are fixed rate morgages…….

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2 Comments

  1. Previous answerer is correct but forgot to add one thing….because these loans are guaranteed by federal agency. Not to protect you but to protect mortgage company from default through guaranteed purchase, etc.

  2. It’s all about the government backing. The government wants to get more homeowners into houses, and by offering low interest rates, this stimulates homeownership. Which is a good thing for the economy.