The largest mortgage insurance company in the world is… wait for it… the United States government!
With more than 8 million home loans insured currently, the U.S. government’s Federal Housing Administration (FHA) is the largest mortgage insurer in the United States, or anywhere else.
The FHA is a government agency formed in the Housing Act of 1934, a post-Great Depression law that remade U.S. banking; and, established new standards for home construction and real estate financing.
Since the agency’s inception, tens of millions of U.S. households have used FHA-backed financing to become homeowners.
The loan’s calling card is that it allows buyers to make a relatively small down payment regardless of their credit rating.
FHA-backed home buyers are asked to have just 3.5 percent of a home’s purchase price in cash at the time of closing, and the cash down payment can come from any source, pretty much — savings, cash gifts from family, a loan against your retirement funds, or others.
FHA loans are also assumable, which means that when you sell your house, you can sell it with your FHA mortgage and interest rate attached. This can help your home’s resale value should interest rates increase in the future.
FHA-backed loans are made through your mortgage lender. Apply for one when you’re ready.
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Debt-to-income ratio is the basis and building block for almost every mortgage approval.