An FHA loan is a government backed loan insured by the Federal Housing Administration, which allows lenders more flexibility in qualifying a borrower. FHA loans have lower credit score requirements, with our lenders offering loans to qualified borrowers with as little as a 580 score--compared to the minimum requirement of 620 for conventional loans. Under an FHA loan, a borrower can obtain a home with as little as 3.5% down on a 1-4 unit residential property.
FHA loans are amortized over 15 or 30 year options with fixed interest rates. Regardless of down payment or loan-to-value (how much your loan amount is in relation to the property value expressed as a percentage), FHA loans require borrowers to pay a one-time Upfront Mortgage Insurance Premium and monthly mortgage insurance. The monthly mortgage insurance will be cancelled after year 11 of your FHA loan, however many buyers use an FHA loan to obtain a property, and once they appreciate in value or acquire a higher credit score, refinance into a conventional mortgage.