Traditional Loan
FHA Loan
FHA Loan
What is an FHA loan?
An FHA loan is a government-backed mortgage insured by the Federal Housing Administration. FHA loans require lower minimum credit scores and a down payment. This loan program is designed to make homeownership more accessible.
FHA Loan
What are the qualifications for this type of loan?
Here’s a detailed look at the basic qualification for a conventional loan.
- A Credit score of at least 580
- Debt-to-income ratio of no more than 50%
- Minimum down payment of 3.5%
FHA Loan
What are the benefits
Here are some of the benefits that an FHA loan gives you.
It’s one of the easiest loans to qualify for, especially if you have less-than-perfect credit.
Qualifications for an FHA loan are even more accessible because of compensating factors. This means that you can submit proof of additional factors to strengthen your application and prove your creditworthiness.
FHA loans require a down payment, but it’s likely you need less time to save up for your home than you imagined. FHA mortgages are designed to help borrowers who may not have 20 percent to put down, especially in pricier markets where this can represent a barrier to homeownership.
FHA loan down payment requirements is based on credit score. Those with a credit score below 580 are required to come up with a higher down payment.
FHA loan interest rates are some of the lowest in the industry. If you have a credit score of less than 650, the FHA rate will almost always be lower than a conventional interest rate.
Interest rates are tied to the perceived risk that lenders anticipate in making a loan. The lender has less risk because they are backed by the Federal Housing Administration and covered by mortgage insurance, resulting in a more favorable interest rate.
