What is a FHA Loan
An FHA loan is a mortgage loan with flexible guidelines backed by the Federal Housing Administration ( A Department of
HUD). FHA loans are extremely popular with
first time home buyers because they allow down payments as low as 3.5% and allow the seller to pay the borrowers closing costs. FHA has
flexible credit requirements. FHA borrowers sometimes have credit scores as low as 580.
Nearly 20% of all mortgages in the United States are FHA loans. A credit challenged borrower is more likely to choose FHA because of the fair treatment of borrowers. The mortgage rate offered to lower credit score borrowers is typically much higher than market mortgage rates but with FHA, the mortgage rate offered only increases slightly for challenged credit. If you want to be sure you are not taken advantage of by a mortgage lender, FHA may be a great option. The loan program for first time home buyers has regulations built in to the guidelines to make sure no home buyer is taken advantage of.
To learn more about FHA and the credit requirements of FHA more details can be found at HUDLoans.us.
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