FHA Loans for Buyers

• Low down payments
• Low closing costs
• Easy credit qualifying

Buying Your First Home?

FHA loans might be just what you need. With down payments as low as 3.5% of the purchase price and the ability to include most closing costs and fees in the loan, FHA makes homeownership more accessible. These loans are available for 1–4 unit properties.

Looking for a Fixer-Upper?

FHA offers a loan that lets you purchase a home, renovate it, and roll all the costs into one convenient loan. Already own a home? You can refinance your current mortgage and include the cost of repairs or remodeling—all in a single loan.

Financial Help for Seniors

If you're 62 or older, live in your home, and either own it outright or have a low loan balance, the FHA Reverse Mortgage may be right for you. This program allows you to convert a portion of your home equity into cash.

Want to Improve Energy Efficiency?

With an FHA Energy-Efficient Mortgage, you can include the costs of energy-saving upgrades in your loan.

Interested in Manufactured or Mobile Homes?

FHA provides financing options for mobile and factory-built homes. There are two loan products: one for homes on owned land, and another for homes located—or to be located—in mobile home parks.

FHA loans have been helping people become homeowners since 1934. How? The Federal Housing Administration (FHA), which is part of HUD, insures the loan—allowing lenders to offer better deals to borrowers.

FHA loans enable buyers to purchase a home with as little as 3.5% down. They are generally more lenient in areas such as credit history, available funds for closing, and co-borrower qualifications.

Most lenders use credit scoring to evaluate loan applications. Studies show a direct link between low credit scores and higher mortgage delinquency rates, which is why many lenders set minimum credit score requirements. Unfortunately, limited credit history, past delinquencies, or errors on a credit report can result in a low score. FHA does not have a strict minimum credit score requirement. While a high score can help with approval, a low score does not automatically mean denial. Instead, borrowers can explain the circumstances behind their credit issues, and that explanation is considered during the underwriting process.

FHA underwriters focus on the borrower’s credit and payment history, especially over the most recent 12 to 24 months. If a borrower has maintained a good payment record during that time, they may be approved for an FHA loan—even if conventional financing has turned them down. An experienced loan officer can help present the borrower’s story clearly and may offer suggestions to strengthen the application. Because of FHA’s flexibility, some borrowers with past credit challenges choose FHA loans even when they have a substantial down payment, avoiding the higher interest rates of conventional loans.

For FHA mortgages, borrowers must contribute at least 3.5% of the sales price toward the transaction. This amount can be used for the down payment and closing costs. However, the total cost to close is often higher than 3.5%. When you factor in closing costs, escrow funds for taxes and insurance, and interest to cover the remainder of the closing month, total costs can range from 6% to 8% of the sales price.

The interest rate you choose also affects your total costs. Opting for a lower rate to reduce your monthly payment may require paying additional "points." Conversely, if you're comfortable with a slightly higher payment, some lenders may reduce your closing costs in exchange for a higher interest rate.

FHA allows borrowers to use various sources to cover closing costs, including personal savings, gifts, grants, loans from retirement accounts, and seller contributions.