FHA Loans: Flexible Financing with Lower Down Payments
An FHA loan is a mortgage insured by the Federal Housing Administration (FHA), designed to help homebuyers with lower credit scores and smaller down payments qualify for homeownership.
Key Benefits
- Low Down Payment – As low as 3.5% down for buyers with a credit score of 580 or higher.
- Flexible Credit Requirements – Borrowers with credit scores as low as 500 may qualify with a 10% down payment.
- Competitive Interest Rates – FHA loans often have lower rates compared to conventional loans.
- Lenient Debt-to-Income (DTI) Ratios – Higher DTI limits allow more flexibility for borrowers.
- Assumable Loans – FHA loans can be transferred to a new buyer, potentially offering lower rates in the future.
Who Qualifies?
- Borrowers with a credit score of 580 or higher for 3.5% down, or 500+ with 10% down.
- A steady employment history and verifiable income are required.
- The home must be a primary residence—FHA loans cannot be used for vacation or investment properties.
Types of FHA Loans
- FHA 203(b) Loan – The standard FHA loan for home purchases.
- FHA 203(k) Loan – Allows buyers to finance home renovations along with the mortgage.
- FHA Streamline Refinance – A simplified refinance option with reduced paperwork and lower costs.
FHA loans provide an accessible path to homeownership with lower down payments and flexible credit requirements.