FHA Mortgage Loans are very popular these days due to their low interest rates and lower down payment requirements. However, what is a FHA Loan exactly? 

If you’re thinking about buying a house, you’ve probably researched the different types of mortgage loans available these days.

FHA loans are mortgages insured by the Federal Housing administration, and can be used to purchase a new home or refinance an existing home. Banks, credit unions, and online lenders can all issue FHA loans. Because they are insured by the government, lenders are more willing to offer better terms to home buyers who might not qualify for a conventional mortgage.

Lets start by taking a look at the various qualifications anyone must have before they apply for, and qualify for a FHA mortgage loan in the future…


Qualifying for a FHA Mortgage Loan

In order to qualify for an FHA loan, you must:


  • Have a minimum credit score of 500, though at least 580 is preferred
  • Be purchasing a primary home
  • Verify your employment and proof of income
  • Be prepared to pay mortgage insurance premiums

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What are the down payment requirements for an FHA loan?

While conventional loans require as much as 20% of the purchase price for a down payment, FHA loans have the lowest down payments of all the mortgage options, and depend on your credit history.

With an FHA loan, your down payment can be as low as 3.5% if your credit score is 580 or above. However, if your credit score is between 500-580, your down payment will be 10% with an FHA loan.

Who Should I Consider for a FHA Loan?

While FHA loans are a popular choice, they aren’t right for everybody. But if you’re having trouble qualifying for other mortgage types, FHA loans are right for you as they can help make your dreams of owning a home come true.


  • First-Time Home Buyers: Some first-time buyers don’t have enough savings to cover a large down payment typically required of conventional loans and can benefit from putting down a lesser amount. What’s more, FHA regulations allow family members, employers or charities to pay all, or part, of the down payment without affecting your eligibility.
  • Buyers with Below Average Credit: If your credit is below average, you could still be eligible for an FHA loan. While credit scores as low as 500 are acceptable, you will need a larger down payment if your score is below 580.
  • Buyers with Bankruptcy or Foreclosure: If your credit report has a bankruptcy or foreclosure on record, there is still some hope of becoming a homeowner. The FHA program can approve you if at least two years have passed since your bankruptcy or at least three years since your foreclosure.
  • Buyers Looking for a Fixer-Upper: Home renovations are a common cost when purchasing a home, and an FHA loan lets you add the cost of upgrades, repairs, or construction into your original mortgage. With this, you don’t need a second loan when buying a fixer-upper. LoanDepot has a solid reputation for mortgage loans where buyers are looking to do work to their new home. Check out the loanDepot review here. 

Is a FHA Mortgage Loan Right for You?

An FHA loan is an excellent option if you’re looking to buy a house as your primary residence. The eligibility requirements are more lenient than other types of home financing options because of the guarantee provided by the Federal Housing Administration.

However, you could end up with a higher payment amount as you are likely to pay a mortgage insurance premium as well as a higher interest rate than with a conventional mortgage. If your credit is less than perfect or you don’t have enough money for a sizable down payment, an FHA loan is a fantastic way to finance your home.

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