An FHA loan provides a government-insured loan with flexible loan options. Even experienced homeowners may need to plan for a long time for a new home purchase. Fortunately, with some circumstances, FHA loans can help some buyers get into the home of their dreams.
What is an FHA loan?
FHA loans are mortgages backed by the U.S. Federal Housing Administration. Lenders, such as banks and credit unions, provide FHA loans. These loans allow funding for home purchases and refinances and have different lending requirements that regular Conventional loans. Buyers may get into a new home with as little as 3.5% down. FHA loans have mortgage insurance requirements that vary depending on loan term and loan type ( Purchase or Refinance ).
What is Required for an FHA loan?
Many of the same documents are required for an FHA loan that are required for Conventional loans. This includes employment & income documentation, appraisal, and proof of down payment assets. Additional stipulations are also attached to the FHA loan process. FHA loans are only available for a primary residence.
Credit requirements may also be lower for FHA loans, given other factors demonstrate that the borrower is able to manage their money responsibly. Each lender looks at individual applications and may ask for additional documentation or explanations. They are often able to work with buyers with a lower credit score or shorter credit history than in other situations.
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