An FHA loan is a government-insured mortgage designed to make homeownership more accessible. Even experienced buyers sometimes need flexibility when planning a purchase, and FHA loans can help by allowing lower down payments and more forgiving credit guidelines.

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What is an FHA loan?

FHA loans are mortgages insured by the Federal Housing Administration and offered through approved lenders such as banks and credit unions. Because the loan is government-insured, lenders are able to offer options with lower down payment requirements, sometimes as low as 3.5%.

With conventional loans, borrowers who put less than 20% down are required to carry private mortgage insurance (PMI). FHA loans do not use PMI. Instead, they include mortgage insurance premiums (MIP) as part of the loan structure, which allows lenders to take on more risk. As a result, FHA loans often involve more detailed review during the approval process.

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What is required for an FHA loan?

FHA loans require many of the same documents as other mortgage programs, including verification of employment, income, assets, credit, and an appraisal of the property. Lenders also review the borrower’s debt-to-income ratio to ensure affordability.

A minimum down payment of 3.5% is typically required for borrowers with qualifying credit. Buyers with lower credit scores may be required to bring additional funds to closing. FHA loans are only available for primary residences.

Credit guidelines are generally more flexible than conventional loans, particularly when other factors show responsible financial management. Each application is reviewed individually, and lenders may request additional documentation or explanations as part of underwriting.

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How FHA Loans Work

• Purchase with as little as 3.5% down

• Fixed-rate terms available in 30-, 25-, 20-, and 15-year options

• 5-year adjustable-rate mortgage option available

• No pre-payment penalties

Have questions? Give us a call. One of our mortgage specialists would be happy to help.