Crucial facts about FHA loans
What is an FHA loan? National Home Search An FHA loan is a mortgage insured by the Federal Housing Administration. Borrowers with FHA loans must pay for mortgage insurance, which protects the lender from a loss should the borrower defaults on the loan. Because of the mortgage insurance, lenders can offer FHA loans at attractive (lower) interest rates with less stringent and more flexible qualification requirements to borrowers. Here are some facts about FHA loans. Credit does not have to be perfect! The minimum credit scores for FHA loans depend on the type of loan a borrower needs. A credit score of 580 or higher can get a borrower a mortgage with a down payment as low as 3.5 percent. With credit scores of 500-579, you will need down payments of at least 10 percent. Those with credit scores under 500 generally are not eligible for FHA loans. However, FHA will make allowances under certain circumstances for applicants who have what it calls "nontraditional c