Quantcast

The FHA Section 245(a) is also called the Growing Equity Mortgage which allows payments start small and increase gradually over time.

FHA Rates Near 50 Year Low!

Now is the time to drop the interest rate on your 30-year mortgage or refinance into a 15-year home loan.

FHA Rates for July 24, 2021
Are You Watching Your Credit Score?

NOTICE: Some FHA mortgage lenders are substantially raising FICO score requirements during the Coronavirus crisis, even though FHA minimums remain unchanged.


- Improving Your Credit Score Has Never Been More Important -

Get started one
Get started two
Get started three
Get started four
FHA.com is a privately owned website, is not a government agency, and does not make loans.

Choose a Loan Type

FHA.com is a privately owned website, is not a government agency, and does not make loans.

FHA Growing Equity Mortgages

Loans for Borrowers with Rising Incomes

FHA Growing Equity Mortgage

FHA Growing Equity Mortgages are home loans that are tailored for first time home buyers or young families. These likely homebuyers are often not in a position that would warrant them being able meet the many upfront and monthly costs that are involved.

FHA's Section 245(a) enables those who currently have a limited income but expect their monthly earnings to increase, to purchase a home with the help of a Growing Equity Mortgage in which payments start small and increase gradually over time. As the mortgage payments grow the additional payment is applied toward the principal on the loan thus reducing the mortgage term. Growing Equity Mortgages also allow homeowners who are interested in further reducing the term of their mortgage to apply scheduled increases in their monthly payments to the outstanding principal balance.

How it Works

Through this and other types of mortgage insurance programs, the lender helps low and moderate-income families purchase homes by keeping the initial costs down. By serving as an umbrella under which lenders have the confidence to extend loans to those who may not meet conventional loan requirements, FHA's mortgage insurance allows individuals to qualify who may have been previously denied for a home loan by conventional underwriting guidelines. It also protects lenders against loan default on mortgages for properties that include manufactured homes, single-family and multifamily properties, and some health-related facilities.

Through the Growing Equity Mortgage program first-time home buyers and others with limited incomes can start out with a low monthly mortgage payment that will increase gradually over time therefore allowing them to purchase a home sooner than they would be able to through conventional financing programs.

Available Assistance

Growing Equity Mortgages are eligible for insurance under Section 203(b) for one to four family homes; Section 203(k) for home purchase, refinancing, or rehabilitation; Section 203(n) for shares in cooperative housing; and Section 234(c) for units in condominiums. Growing Equity Mortgages must meet the requirements of the section under which they are insured but certain exceptions are available.

Each of the five Growing Equity Mortgage plans provides for monthly payments to be increased by a fixed percentage during each year of the loan. The initial year's payments to principal and interest are based on a 30 year level payment schedule. Thereafter the amount of the monthly payments for the next 12 months will increase each year by between 1 and 5 percent depending on the plan selected. The actual term of the mortgage will not exceed 22 years and may be less depending on the specific Growing Equity Mortgage plan and interest rate selected.

Eligibility

Most lenders who use this mortgage insurance product make their requests through a provision known as "direct endorsement," which authorizes them to consider applications without submitting paperwork to HUD.

Application

Growing Equity Mortgages are available to anyone who anticipates their earnings to increase appreciably and intends to use the mortgaged property as their primary residence.

FHA Loan Programs

SEE YOUR CREDIT SCORES   From All 3 Bureaus  

Do you know what's on your credit report?

Learn what your score means.


GET STARTED

FHA Loan Articles and Mortgage News

Reasons Why Underwriters Might Deny Your Home Loan

July 21, 2021 - Are you concerned that your lender might deny your home loan? Do you know why your loan might be denied and what you can do about it ahead of time? Reasons may include late or missed payments on rent or past mortgages, low credit scores, or houses that cannot pass the appraisal process.

FHA Loan Rates: Things to Know

July 17, 2021 - The interest rate on your mortgage is an important aspect of your home loan--one you’ll want to think about as early as possible in your planning stages.  If you don’t run the numbers on how much your mortgage will cost over the lifetime of the loan, you’re at a disadvantage.

Benefits of an FHA Loan

July 14, 2021 - What are the benefits of an FHA mortgage loan? There are many things that borrowers may view as helpful, more than may be viewed as pro-consumer, but what are the actual benefits of an FHA mortgage over other types of home loans?

FHA and USDA Home Loan Comparison - Part Two

July 10, 2021 - USDA loans are intended for purchasing a home in agency-defined rural areas. FHA home loans feature no such restrictions on where you may purchase the home, though there are typical considerations for certain natural disaster zones, coastal barrier resource system or protected areas.

FHA and USDA Home Loan Comparison - Part One

July 8, 2021 - If you are looking for an affordable home loan with a low down payment, you have several options depending on your circumstances, financial goals, and credit history. Yes, you have conventional mortgages as an option, but there are also USDA and FHA mortgages.