7 Crucial Facts about FHA Loans
RIS Media, by Marcie Geffner, March 3, 2014 An FHA loan is a mortgage insured by the Federal Housing Administration, a government agency within the U.S. Department of Housing and Urban Development. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. Because of that insurance, lenders can, and do, offer FHA loans at attractive interest rates and with less stringent and more flexible qualification requirements. 1. Less-than-perfect credit is ok: The FHA doesn't mandate a minimum credit score. Instead, each borrower's creditworthiness is considered in context. Some leeway is allowed. Lenders can, however, overlay their own requirements on top of the FHA's guidelines. Some lenders might require a minimum credit score. 2. Minimum down payment is 3.5 percent: That is a fraction of the percentage typically required on most other loans. 3. Closing costs may be covered: The FHA allows home sell