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FHA Loans - Adjustable Rate Mortgage Loan
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, town homes, 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.
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