What is an FHA Loan?
An FHA loan is a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low-to-moderate income borrowers who are unable to make a large down payment. As of 2016, these loans allow the borrower to borrow up to 96.5% of the value of the home; the 3.5% down payment requirement can come from a gift or a grant, which makes FHA loans popular with first-time homebuyers.
A fixed-rate mortgage (FRM) is a type of mortgage characterized by an interest rate which does not change over the life of the loan. A 30–year FRM is simply a fixed rate mortgage that lasts for 30 years.
A 15–year FRM is simply a fixed rate mortgage that lasts for 15 years.
A 5 Year ARM is a loan with a fixed rate for the first 5 years that has a rate that changes once each year for the remaining life of the loan. Because the interest rate can change after the first 5 years, the monthly payment may also change. A 5 year ARM, also known as a 5/1 ARM, is a hybrid mortgage.