An Federal Housing Administration (FHA) insured mortgage is often the best - and sometimes only - option for many homebuyers. Check out the list below to understand some of the most basic benefits of an FHA mortgage.
Easier to Qualify for – because they’re insured by the federal government, FHA mortgages often have more lenient qualifying requirements than conventional loans.
Low Down Payment – FHA insured mortgages only require a 3.5% down-payment which can make it easier for people to own homes. Additionally, the 3.5% can come in the form of a gift from an eligilbe donor (usually a family member). In some cases, a small second mortgage or grant combined with an FHA first mortgage make it possible to buy a house with zero down payment.
Lower Credit Score Borrowers Qualify – whereas a Conventional mortgage normally requires a minimum 620 qualifying credit score, it's possible to qualify for an FHA mortgage through Latitude Lending with a qualifying score as low as 580.
Better Interest Rates – in many cases, borrowers will get a lower interest rate and lower total cost on their financing with an FHA mortgage. This is particularly true for borrowers with lower qualifying credit scores.
Assumability - FHA mortgages are in most cases "assumable". This means that when you go to sell your house, a qualified buyer could potentially take over (assume) your existing FHA loan. This can be a significant benefit, especially if the interest rate you have on your mortgage is lower than the prevailing rates available at the time you are selling.
These materials are not from HUD or FHA and were not approved by HUD or a government agency.