Fixed-Rate FHA Loan
Fixed-rate mortgages are the most common type of FHA loan, as they offer a reliable, consistent payment that homeowners can count on. These typically come in 15- and 30-year terms and have the same interest rate for the entirety of that term. While the government fully backs the loan, lenders set their own interest rates.
Adjustable Rate Mortgage (ARM)
Adjustable-rate FHA loans have interest rates that vary over time. They may have a period of 3, 5 or 7 years in which the initial low rate is fixed, but after that period lapses, the rate can rise. This means your mortgage payment would rise as well.
FHA Energy Efficient Mortgage (EEM)
FHA Energy Efficient Mortgages, or EEMs, encourage homeowners to make energy-efficient upgrades on their properties. The loans can be used to cover the costs of acceptable energy-related improvements on an existing home or a new home you’re purchasing.
Other FHA Loan Types
There are other, less-used FHA loan types as well, including the 203(k) – a mortgage generally reserved for fixed-uppers. The FHA 203(k) loan allows you to roll the costs of your repair and renovation expenses into your mortgage, which is based on the expected higher value of the property after those improvements are made.
There are also streamline refinance FHA loans, which offer existing FHA borrowers a quick and easy refinancing process, as well as Title 1 FHA loans that cover home improvements and repairs.
