An FHA loan is a type of mortgage backed by the Federal Housing Administration, a government agency within the U.S Department of Housing and Urban Development.
FHA loans are widely used by the borrowers due to the minimum down payment requirements, easier qualification process and rather flexible lending norms. Even if the applicant doesn’t have a long credit history, he can still be qualified for the FHA loan program.
The credit of such kind may be provided with fixed or adjustable interest rates and has the highest borrowing limits. The latter vary and depend on the state you live in.
The main benefits of the FHA loan are:
- fair credit requirements;
- better income standards;
- lowest down payment norms (3,5%).
It should be mentioned that if you are a current military unit or a veteran, you can also be qualified for a VA home loan. The loan has low down payment requirements as well.