An FHA loan is a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low-to-moderate income borrowers who are unable to make a large down payment.
Advantages of a FHA Loans
- Low 3.5% down payment
- 100% gift funds – the entire 3.5% down payment can be a gift from parents, relatives or an employer.
- FHA allows seller to give up to 6% of the home’s purchase price to an FHA buyer to pay for closing costs and pre-paid costs.
- Flexible credit qualifying – because it is government-backed, it’s possible to qualify for an FHA loan with a lower credit score than on conventional loan programs
- Upfront mortgage insurance may be financed or paid in cash.
- Ability to choose from a fixed-rate or adjustable rate