An FHA loan is a mortgage insured by the U.S. Federal Housing Administration (FHA), allowing low-income borrowers to buy a home when they otherwise couldn't. With this type of loan, first-time home buyers have three advantages: small down payments, low closing costs and looser credit requirements relative to conventional mortgages.
With a minimum credit score of 580, a borrower would need to contribute only a 3.5 percent down payment. FHA-approved lenders, the only type authorized to provide such loans, may also approve borrowers with a lower credit score but will typically require a bigger down payment — about 10 percent.
It is a mortgage insured by the Federal Housing Administration (FHA) with the main benefit being a down payment as low as 3.5%. The catch is that with such a low down payment, one would need a primary mortgage insurance or two. Learn more from this nicely compiled guide at Zillow.
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