When you are looking at the separate loans ready to purchase or refinance, it can be confusing. Over the past year there have been many changes in the underwriting guidelines for all mortgages. Fha has come to be a very beloved option for many home buyers. Let's take a look at the basic differences between an Fha loan and a approved loan.
Fha stands for Federal Housing Administration. Fha insures loans that are made by approved Fha lenders, they do not lend directly to borrowers. Fha provides lenders with guarnatee in case a borrower defaults on their loan.
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Fannie Mae and Freddie Mac are government sponsored enterprises (Gse). Their mission is to furnish stability and liquidity to the U.S housing and mortgage markets. These Gse's also do not lend directly to borrowers, but they help to ensure that the banks and mortgage associates have funds to lend at affordable rates. These types of loans are typically approved loans.
