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What is an FHA Loan?
April 25, 2019 at 1:28pm | Jasmin Bradley
We know home loans can be a lot to understand and a bit scary if you're a first-time buyer. Last week we gave the rundown on Conventional Loans. And we're continuing our home loan series by breaking down the FHA home loan.
What is an FHA loan?
An FHA loan is a government-backed mortgage insured by the Federal Housing Administration. This is a very popular loan for first-time home buyers as it requires a lower minimum credit score and down payment than many conventional loans. The FHA loan
also carries a 3.5% percent down payment.
(For example: If you were to get approved for a $100,000 home, then your down payment will be $3,500. So the myth that you always have to pay 20% down isn't true! Woo-hoo!)
One of the good things about this loan is that once you've found your dream home and have gone under contract, they send an inspector out to make sure the home is buyer ready.
Bank Credit Qualifications Keep in mind that the FHA loan is not an automatic loan. You will have to be credit-approved. Some banks could accept a score as low as 580, but the standard is about a 644 for an FHA loan.
FHA loans also have something called private mortgage insurance. It's something that is attached to the life of the loan and is just added to your monthly payment. If you're interested in learning more the different loan types, be sure to
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