Subprime Loan Alternatives

Subprime Loan Alternatives

Federal Housing Administration

According to Jerry Brown, a public affairs officer with the FHA, the administration wants to make it easier for low and middle income, credit damaged and first-time home buyers to get a foot in the door.

FHA loans originated during the Great Depression when foreclosure waves put hundreds of thousands of people onto the streets. They're offered by private lenders but insured by the government, reducing risk, so lenders are willing to make them at favorable terms.

FHA loans used to be more popular, but they were eclipsed by easier-to-obtain subprime products.

One reason is that the application process for an FHA loan is more tedious and requires more paperwork than that of subprime loans touted during the housing boom.

Read more about other subprime loan alternatives…

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