What are FHA Loans?
Since 1934, FHA loans have helped millions of homebuyers become homeowners. Insured by the Federal
Housing Administration (FHA), these loans typically have lower down payments and more flexible credit
requirements than non-government-backed loans.
Highlights of an FHA loan:
As low as 3.5 percent down payment allowed
Down payment can be gifted from a relative, borrowed from an eligible 401K or provided through an
approved state or local program
Co-signers are allowed (but must be eligible borrowers)
- Seller can contribute up to 6% of the
purchase price toward closing costs
Two types of mortgage insurance (MI) are required:
- Upfront MI – can be financed into the loan or paid in cash
- Annual MI – paid monthly as part of the mortgage payment
Available only for financing a primary residence
Minimum 620 credit score required for manually underwritten loans
Minimum 580 credit score allowed with Automated Underwriting System Approve/Eligible*
Loan limits may vary by State/County
*Not all borrowers with 580 credit scores will qualify.