What is a FHA loan?
A FHA mortgage is a mortgage that is insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance which protects the lender in the case that the borrower defaults on the loan.
Why choose a FHA loan?
Less stringent lending qualifications and lower down payments, makes the FHA home loan very attractive to the average borrower. For borrowers interested in applying for a FHA loan, applicants are required to have a minimum FICO score of 580 to qualify for the low down payment option, otherwise they may be required to pay up to 10%. FHA Home loans are not just for first time homebuyers, they are for everyone occupying the home as a primary residence. FHA only requires 3.5% of the home value as a down payment and there is no limit as to how many FHA loans you may obtain over any given time period. Since the lender is insured in case of default, they are able to offer attractive interest rates to the borrower which makes this mortgage option great for first time home buyers as well as home buyers with less than perfect credit.