FHA loans are insured by the Federal Housing Administration, which means lenders are offered protection by the federal government in the event that a buyer cannot pay their loan. This allows lenders to offer loans with better terms to buyers, which means increased home ownership and a better economy overall.
The Federal Housing Administration provides mortgage insurance on loans made by FHA-approved lenders in the United States. As one of the largest insurers of mortgages in the world, the FHA has insured more than 46 million mortgages since it was created in 1934.
FHA loans are insured by the FHA. They are popular among first time home buyers because they allow lower down payments for qualified buyers. Buyers do not need to have the traditional 20% down payment available, and may be able to procure a loan with a down payment as low as 3.5%.
Pros of FHA Loans
down payment as low as 3.5%
flexible credit, income, and down payment requirements
100% gifted down payment
seller and/or realtor closing costs permitted (up to a certain percentage based on the loan amount and down payment.)
includes a mortgage insurance premium
fixed and adjustable rate mortgages available
choose between 15 and 30-year fixed rate terms
ideal for single family, townhomes, condos, and manufactured homes