About the FHA Loan Program
The FHA loan is a mortgage option that was established by the federal government. The Federal Housing Administration, a unit within the Department of Housing and Urban Development, insures the loan. It is a powerful tool that gives lenders confidence while offering home buyers an opportunity to own real estate.
An FHA-backed loan is a great financing option for first-time home buyers, thanks to two distinct features of the program. First, the credit score requirements for this loan are lower than most private mortgages. Potential borrowers with less-than-perfect credit histories have a chance to finance their real estate prospects through this program.
Second, the down payment for a house under FHA is also lower. Borrowers can take advantage of a down payment as low as 3.5% of the purchase price of the property. In turn, the upfront costs of buying are more manageable, which makes housing more accessible.
The FHA loan can be used for more than buying a property, too. Current homeowners may qualify for this program if they are planning renovation projects to make a property more energy efficient. Senior citizens may also apply for an FHA-backed reverse mortgage to convert their equity into cash.