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The people who take out FHA loans pay for them. While the government does guarantee FHA loans, the funding for the government guarantee comes from the mortgage insurance premium that is built in to the payments of the loan. The money for the loan proceeds comes from the lender. The government guarantee induces lenders to fund loans with less than the usual down payment requirement. Slightly higher interest rates act as a further inducement to lenders.
4 weeks ago
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If I am an investor and want to lend money- I can lend money under a conventional loan with their rules or an FHA loan with their rules. So the money to fund the loan would come from the investor. In the past all this money came from big insurance companies and banks and savings and loans that had large deposits. Now-days these often come from bond holders and such. FHA just regulates the way the loan is structured- who will qualify, and insures the possible loss in a foreclosure.
by glenn- 4 weeks ago