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Simple English definitions for legal terms
FHA mortgage
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A quick definition of FHA mortgage:
An FHA mortgage is a type of loan that helps people buy a home. When you get an FHA mortgage, you promise to pay back the money you borrowed, plus interest, over a certain amount of time. If you can't pay it back, the bank can take your home. The government helps insure the loan, which makes it easier for people to get approved.A more thorough explanation:
An FHA mortgage is a type of mortgage that is fully or partially insured by the Federal Housing Administration. This means that if the borrower defaults on the loan, the FHA will pay the lender a portion of the outstanding balance. FHA mortgages are often used by first-time homebuyers or those with lower credit scores, as they typically have lower down payment requirements and more lenient credit score requirements than conventional mortgages.
For example, if a borrower takes out an FHA mortgage for $200,000 and defaults on the loan when the outstanding balance is $150,000, the FHA will pay the lender $75,000 (assuming the FHA insurance covers 50% of the outstanding balance).