Mortgage Q&A

Q: I'm looking to refinance the mortgage on a home my family purchased in 2007, but we don't yet have much equity built up.

Is there an option for us?

A: You can refinance with an Federal Housing Administration loan even if you have little, or even no, equity in your home.

That can make all the difference in the world for borrowers who don't have at least 20 percent equity in their homes -- something banks and mortgage companies usually demand for conventional refinancings.

It's easier to qualify for an FHA loan, too.

You can have lower credit scores and more debt than with a non-FHA mortgage.

The Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development, doesn't actually make loans.

It guarantees that private lenders will be repaid, even if the borrower defaults.

With the government standing behind you, banks and mortgage companies can make loans they wouldn't normally offer at competitive interest rates that could cut your monthly payments by hundreds of dollars.

There are several options for refinancing your home with the FHA's help.

A Streamline Refinancing is for borrowers who already have an FHA loan, regardless of how much equity they have in their home. An appraisal isn't even required.

Standard Refinancing is for borrowers who have a non-FHA loan and as little as 2.25 percent equity in their homes. To obtain this financing you'll have to qualify for an FHA loan much like you would if you were buying a home.

The Short Refinance Program is for borrowers who don't have an FHA loan and owe more on their mortgages than their homes are worth.