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Federal Housing Administration (FHA) mortgages, which are made by private lenders, resemble conventional mortgages in many ways, but there are some significant differences.
An FHA mortgage is government insured, so lenders are protected against default. That insurance, for which borrowers pay a mortgage insurance premium, encourages qualifying lenders to make FHA loans.
The buyer's closing costs are limited and the required down payment is lower. There is a price ceiling on the amount a homebuyer can borrow with an FHA mortgage, based on the state and county where the property is located.
Furthermore, people who may not qualify for a conventional mortgage because of previous credit problems may qualify for an FHA loan.
These mortgages are assumable, which means a new buyer can take over the payments without having to secure a new loan.Yahoo Finance - Cite This Source - This Definition
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