What is an FHA home loan?
An FHA home loan is still issued by a private financial provider, but it’s insured by the Federal Housing Administration (FHA). Essentially, this provides the lender with greater security and you with lower monthly payments. Why should I ask for an FHA loan instead of a conventional loan? 1. It’s easier to qualify for an FHA loan. Because the mortgage is insured by the FHA and the U.S. Department of Housing and Urban Development, lenders are more likely to issue the loan. 2. You can still qualify with poor credit. Even with past credit problems like a bankruptcy, an FHA loan is easier to qualify for than a conventional mortgage. 3. A lower down payment. An FHA loan only asks for a 3% down payment, which is significantly lower than some banks’ requirements of 10-20%. 4. The loan costs less in the long term than a conventional loan. Because the FHA can offer more competitive interest rates, you’ll often receive lower rates which will save you a lot of money over the term of your loan. 5.