Federal Housing Administration (FHA) Loan

What is it?

A Federal Housing Administration (FHA) loan is a mortgage loan that’s insured or guaranteed by the federal government, through the FHA.

Advantages of an FHA loan

  • Requires a smaller downpayment--sometimes as little as 3.5 percent. 
  • Other requirements, like credit score and debt to income ratios, are usually more flexible than they are for a conventional loan.
  • It's typically easier to refinance a traditional loan
  • There are no pre-payment penalties

Disadvantages of an FHA loan

  • You'll pay mortgage insurance both upfront and on an annual basis
  • There's a limit on the amount of money you can borrow, which may fall short of average home prices depending on where you live

Is it right for you?

FHA loans are a good option for people who:

  • don't have 20 percent for a down payment
  • have a credit score of 580 or above

How would an FHA loan affect your homebuying process? Check out the estimated mortgage rates and then find out how much house you can afford

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