FHA Loan

An FHA loan is a mortgage that is not only issued by an FHA-approved lender but also insured by the Federal Housing Authority (FHA). It is a loan scheme designed for low and moderate-income earners, requiring a lower minimum down payment as well as good credit scores in relation to other conventional mortgages. The down payment is as low as 3.5% while a credit score of 580 or higher is enough to prequalify. However, for individuals whose credit score is below 580, they can still access FHA loans provided they can provide 10% down payment. Qualifying for FHA loan is quite easier than qualifying for a conventional loan since the latter is not insured or guaranteed by the government. Also, FHA loans allow for lower credit scores than conventional loans and the rules are more liberal since it accepts financial gifts from family members or grants as means of down payment