The demise of the housing industry and the fall out of the credit markets are breathing new life into the market for FHA mortgages. FHA mortgages, are short for Federal Housing Administration a department of the Housing and Urban Development (HUD). FHA loans were often a great alternative for first time home buyers as they require only a 3 % down payment all of which could come in the form of a gift. FHA loans are also becoming an increasingly popular tool for home owners who would like to refinance as they allow for an owner to cash out up to 95% of the properties value. FHA loan sizes are limited based on the county you live in and are typically only for home owners with home values under $300,000 in most areas. Not all lenders are authorized to write FHA loans and you can not receive a loan directly from HUD. FHA's role is to provide underwriting guidelines and insurance for a loan to approved lenders. FHA receives an up front insurance as well as a monthly mortgage insurance payment to help protect themselves if a borrower defaults. FHA mortgage rates should be very competitive with conventional financing.

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