Federal Housing Administration (FHA) Loans
This loan program provides federal assistance so more Americans can become homeowners. FHA loans only require a 3.5% down payment (versus a standard 5% minimum requirement) and do not require the purchase of separate private mortgage insurance (PMI).
Since FHA loans are easier to qualify for, they are perfect for first time home buyers who typically need more assistance to purchase a home.
- Summary
- Easier to qualify than a conventional loan
- Available in fixed rate or ARM
- Lower down payment
- Pre-qualification available
- Quick decisions, and local service
- Mortgage insurance is built in, does not require additional PMI purchase
- Qualifications
FHA loans make a home mortgage available even if credit scores and income fall below the traditional measures for a home mortgage. Some of the basic qualifications are:
- Two years of steady employment
- Credit score of 620 or higher
- Any bankruptcy must be at least two years old
- Any foreclosure must be at least three years old
- Total monthly debt obligations (including your mortgage payment) should not exceed 45% of your gross monthly income.
Additionally there are lending limits associated with FHA loans. These vary by county. To see the maximum home value for which you can apply for an FHA loan, click here.
