An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan.
Who can qualify for an FHA loan?
Typically an FHA loan is one of the easiest 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 500 can qualify for an FHA loan. An FHA Loan is available with fixed rates or as an adjustable-rate mortgage.
For those interested in applying for an FHA loan, applicants are now required to have a minimum FICO score of 580 to qualify for the low down payment advantage, which is currently at around 3.5 percent. If your credit score is below 580, however, you aren’t necessarily excluded from FHA loan eligibility. Plus, FHA loans are not only for first-time buyers. FHA loans can be used by first-time buyers and repeat buyers alike. The FHA loan is often marketed as a product for “first-time buyers” because of its low down payment requirements.