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FHA Loan

About FHA loan

An FHA loan is a federal assistance mortgage loan in the United States insured by the Federal Housing Administration. The loan may be issued by federally qualified lenders.

FHA primarily serves people who cannot afford a conventional down payment or otherwise do not qualify for private mortgage insurance.

FHA mortgage loans are issued by federally qualified lenders certified by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development.

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Benefits of a FHA loan

  • Low Down Payment: FHA loans typically require a down payment as low as 3.5% of the purchase price, reducing the upfront financial burden on homebuyers.
  • Lenient Credit Requirements: FHA loans have more forgiving credit score requirements compared to conventional mortgages, allowing individuals with less-than-perfect credit histories to qualify for homeownership.
  • Flexible Qualification Criteria: FHA loans consider various factors such as employment history, income stability, and debt-to-income ratio, providing more flexibility for borrowers in diverse financial situations.
  • Government Backing: FHA loans are backed by the federal government, encouraging lenders to extend loans to borrowers who may not qualify for conventional mortgages and often resulting in lower interest rates.

FHA loan eligibility requirements

  • A credit score of at least 500, with a down payment of 10%.
  • A credit score of at least 580, with a down payment of 3.5%.
  • The borrower must be able to afford the 3.5% down payment.
  • A reasonable debt-to-income ratio is required.
  • The property being purchased must serve as the borrower’s primary residence.
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