WHY AN FHA LOAN?
FHA loans are mortgages that are insured (backed) by the federal government through the Federal Housing Administration.
FHA loans have lower barriers to entry compared to conventional mortgages, with lower credit requirements and other terms that make them easier for first-time buyers or borrowers with less than perfect credit to qualify for.
FHA LOAN REQUIREMENTS
- Minimum credit score of 500 to qualify
- 580 or better preferred
- Down payment of 3.5% with a 580+ credit score
- Down payment of 10% with credit score 500-579
- Down payment can come from cash gifts
- The loan can only be for a primary residence
- Debt-to-income ratio up to 50%
- No bankruptcy or foreclosure in the past 3 years
The loan must be within FHA loan limits for the county the home is in, and the home must be able to pass an FHA inspection to ensure it is in livable condition. Mortgage insurance premiums (aka MIPS) will be included in your payment.