An FHA loan is a home loan the Federal Housing Administration insures and allow relaxed lending standards to help homeowners who don’t qualify for a conventional mortgage.
Typically an FHA loan is one of the easier types of mortgage loans to qualify for because it requires a low down payment and you can have less-than-perfect credit. For FHA loans, down payment of 3.5 percent is required for maximum financing. Borrowers with credit scores as low as 580 can qualify for an FHA loan, and those with 640 or higher can typically qualify for lower rates than conventional financing.
The FHA provides mortgage insurance on loans and guarantees them in case borrowers default. The premiums on the insurance are paid by the borrower up-front either in cash or financed into the loan amount, and also annually, spread even among the monthly payments. Unlike conventional loans where private mortgage insurance can be cancelled, in most cases FHA mortgage insurance will stand for the life of the loan.
FHA also has a program called a 203-K that you can buy and completely renovate your property.
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