Quantcast

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

FHA Mortgage Loan Rates

August 18, 2019
FHA Rates for August 18, 2019
Compare 30 Year Fixed Mortgages
Compare 15 Year Fixed Mortgages
Use our mortgage calculators
to see what you can afford!
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

then
get
your

Your Credit Score

Do you know what's on
your credit report?
Get Credit Score Button
Get Credit Score Button
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 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.

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

What Does Your Monthly FHA Mortgage Include?

August 8, 2019 - If you are in the planning stages for an FHA home loan, it’s important to begin budgeting for your home loan-related expenses including appraisal fees, home inspection fees, any required pest control, hazard insurance, and other costs.

First-Time Home Buyer Advice

July 30, 2019 - Buying a home for the first time? You will get plenty of advice-some you want, and some you don’t. What should you do once you have prepared in advance by working on your credit, pulling your credit reports, and saving up for the down payment and closing costs?

FHA Loan Rules You Should Know About Judgments

July 20, 2019 - FHA home loan rules for lenders includes step-by-step instructions on what to do in certain cases where negative credit information is on a borrower’s credit report. What do you need to know about judgments and how they can affect FHA home loan approval?

What to Look For in a Home

July 11, 2019 - There are several things you need to know about the house you are thinking of buying with an FHA mortgage. Don’t hesitate to ask the seller how old the property is, how long since the roof was repaired or replaced, or if there are problems with mold, flooding, or noise in the area.

FHA Purchase and Refi Loan Questions and Answers

July 8, 2019 - Whether you're a first time homebuyer, moving to a new home, or want to refinance your existing conventional or FHA mortgage, the FHA loan program will let you purchase a home with a low down payment and flexible guidelines.

FHA.com Reviews

FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!