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Home > FHA Loan Program > FHA Adjustable Rate Mortgage Loans

FHA Loans - FHA Adjustable Rate Mortgage Loan
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The FHA adjustable rate mortgage loan (a.k.a. Variable, ARM) is one of the best adjustable rate mortgages available.You may use this FHA loan program for 1-4 unit homes, as well as condominiums, townhomes, and PUDs.

FHA does not offer an initial low "teaser" rate like most other adjustable rate mortgages, therefore it will normally start at a slightly higher rate than most other adjustable loans.

FHA adjustable mortgages are designed to protect the home owner from larger payment and interest rates adjustments common with other loans.

The yearly interest can rise or decrease no more than 1% per year vs. 2% for a conventional loan.

The lifetime cap of the FHA adjustable mortgage is no more than 5% over the initial start rate vs. 6% for a conventional loan.

Therefore, a FHA can take 5 years before reaching its maximum rate vs. a conventional loan can cap in only 3 years.

FHA's adjustable rate mortgage is based on the economic indicator index called the 1-Yr. T-Bill. You can predict what the interest rate will adjust to by working through the ARM interest rate formula which is as follows:

  • Index  + Margin  = Fully Indexed Rate

(current 1 Yr. T-Bill Rate) + (percentage, usually 2.75%) = Interest Rate

Example:

  • Index = 5.25%  + Margin of 2.75% = Fully Indexed Rate =   8.00%

Other benefits of the FHA adjustable rate mortgage is that you can "streamline refinance" to a FHA fixed rate mortgage at anytime. Also, since you qualify at the lower start rate, you can qualify for a larger loan amount and a higher sales price home.

Learn how a FHA adjustable rate mortgage will affect you for loan qualification by clicking ra.gif (855 bytes) Here.

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We are not a government agency.  FHA home loans are not originated by the HUD or FHA. HUD only insures FHA loans and HECM reverse mortgages. FHA loans are originated and funded by HUD approved FHA home loan lenders. FHA-Home-Loans.com is not a mortgage lender and does not make or offer fha loans directly or indirectly.  Information about FHASecure refinance program to help borrowers who are facing foreclosure and must refinance.FHA-Home-Loans.com is owned and operated by a private company specialized in providing information about FHA loans and does not make or offer FHA home loans and FHA mortgages. FHA-Home-Loans.com is not affiliated with or owned, operated, endorsed or sponsored by HUD, Federal Housing Administration or FHA. Contact HUD directly at: www.hud.gov
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