Federal Housing Administration
FHA loans are insured by the Federal Housing Administration, designed to help individuals who may not qualify for conventional loans due to lower credit scores or smaller down payments.
With down payments as low as 3.5% and more lenient credit requirements, FHA loans are a popular choice for first-time homebuyers. However, borrowers are required to pay mortgage insurance premiums (MIP), which increases the overall cost of the loan.
FHA loans are suitable for buyers who need a bit more flexibility in terms of credit and initial funds but are willing to trade off with added insurance costs.
Frequently Asked Questions
An FHA loan is a mortgage insured by the Federal Housing Administration, designed to help low- to moderate-income borrowers. Qualification requirements include a minimum credit score of 580 (with 3.5% down) or 500 (with 10% down), a steady employment history, and a manageable debt-to-income ratio.
FHA loans require a down payment of as low as 3.5% of the home’s purchase price for those with a credit score of 580 or above. Borrowers with credit scores between 500-579 may still qualify, though they need to put down 10%.
FHA loans offer flexible credit requirements and low down payment options, making them accessible for first-time buyers or those with less-than-perfect credit. FHA loans also come with fixed interest rates, and closing costs can sometimes be rolled into the loan, reducing the upfront expense.