FHA Loan

Overview

FHA loans are insured by the Federal Housing Administration, which lets lenders offer easier qualification standards than a conventional loan. They allow down payments as low as 3.5% and credit scores down to 580 (and sometimes lower with compensating factors), making them a popular choice for first-time buyers and borrowers rebuilding credit.

The trade-off is mortgage insurance: FHA loans require both an upfront mortgage insurance premium and an annual one, and on most modern FHA loans, the insurance lasts the life of the loan. Refinancing into a conventional loan once you have equity is a common exit.

Who it's for

First-time buyers with limited down payment savings
Borrowers with credit scores below conventional thresholds
Buyers with higher debt-to-income ratios
Anyone needing a non-occupant co-signer or co-borrower

What's typically reviewed

Credit score (typically 580+ for 3.5% down)
Documented income and employment
Down payment from your own funds, gift, or eligible source
Property must meet FHA minimum standards
Owner-occupancy required

This is a general description, not a guarantee of approval. Specific requirements vary by lender and program. Final qualification is determined during underwriting.

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