What is an FHA 245 Mortgage Loan?

What is the FHA 245 Mortgage Program?

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The Federal Housing Administration has long been involved in creating affordable home loan opportunities for families in different financial situations. FHA home loans are typically the first thing that comes to mind when homebuyers are looking for low down payment options. But the FHA’s home loan program contains even more flexible options that home buyers may not be aware of. One such loan falls under section 245 of the program.
Under section 245 of the FHA home loan program, home buyers with low income who expect their monthly earnings to increase may be eligible for a growing equity home loan. These home loans are designed to cushion the upfront costs for home buyers that may not be able to afford them. This is especially well-suited for first-time home buyers.
Through the FHA 245 Growing Equity Mortgage program, first-time home buyers and families with lower incomes can purchase a home with a low monthly mortgage payment that increases gradually over time. This allows them to buy a home sooner than they would be able to through conventional loan programs.

What’s a growing equity loan?

Growing equity loans are typically fixed-rate loans with a special payment schedule that involves payments that increase over time, without causing negative amortization. This in turn helps build equity faster, hence the name. With the graduated payment schedule, the interest remains the same, even though the payment increases. The additional payment is then applied toward the principal amount, which increases equity while decreasing the mortgage term length. 

If you'd like to learn more about the FHA 245 program, fill out the form below, and a home loan specialist will get in touch with you