The Federal Housing Administration (FHA) loan, explained

An FHA loan is a home loan issued by FHA-approved lenders and insured by the Federal Housing Administration. Because the government guarantees these loans, lenders are more willing to lend, which makes FHA loans a great option for those who want a low down payment or to refinance a loan with a higher loan-to-value consideration.

Characteristics of an FHA loan.

  • Low down payment, typically a minimum of 3.5%; which is great for first-time home buyers
  • Higher loan limits allow homebuyers to buy higher-priced homes with less down payment
  • Borrowers must live in the home as the primary residence
  • Requires a home appraisal by an FHA-approved appraiser*
  • Requires borrowers to pay mortgage insurance premiums*
  • Flip properties are allowed
  • Credit scores to 640, flexible debt ratios, and seller contributions permitted

*Note: As of June 2012, the FHA launched its Streamline Finance program, which does not require an appraisal and offers significantly lowered mortgage insurance costs for borrowers who qualify. Call us at 866-612-5050 to see if you qualify for this new program!

Is an FHA loan the right mortgage option for you?

The FHA loan option is popular with first-time homebuyers with less cash available for a down payment. An FHA loan may be right for you if you:

  • Have an FHA loan now and want to refinance
  • Have a loan with an interest rate higher than today’s rate
  • Prefer a loan requiring a lower down payment