LOAN PROGRAMS
FHA LOAN PROGRAM
What is a Federal Housing Administration Loan (FHA Loan)?
An FHA loan is a government loan issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate-income borrowers, FHA loans require a lower minimum down payments and lower credit scores than many conventional loans.
You can make a down payment as low as 3.5% with an FHA loan. You'll need a credit score of at least 580 to qualify. If your credit score is between 500 and 579, you can still get an FHA loan with a 10% down payment. With FHA loans, your down payment can come from savings, a financial gift from a family member or a grant for down-payment assistance.
All these factors make FHA loans popular with first-time homebuyers.
FHA vs. Conventional Loans: Key Differences
In conventional loans, you will need to pay for mortgage insurance for down payments under 20%. FHA loan programs require mortgage insurance no matter your down payment. These FHA mortgage insurance payments will be the same regardless of your credit score.
FHA Loans
- Lower credit scores allowed
- More rigid property standards
- Somewhat higher down payment needed (3.5% down)
- Mortgage Insurance Premium (MIP) required for loan term
Conventional Loans
- Higher credit score needed (at least 620)
- Slightly smaller down payments allowed (3%down)
- Private Mortgage Insurance (PMI) is required for down payments less than 20%
- More liberal property standards