Definition - What does 203(B) mean?
A 203(b) is a type of first home mortgage that a buyer can take out at a set length of time, either 15 or 30 years, with an interest rate that is determined on an individual basis and agreed upon between borrower and lender. The loans are designed and backed by the FHA, the Federal Housing Administration. This means that borrowers on low incomes would be able to qualify for a mortgage as long as a required 1.75% were paid upfront.
Justipedia explains 203(B)
FHA mortgages are automatically government backed with insurance and allows the lender to feel safe that there will be less of a potential for default.
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