This loan is a great option for people whose credit scores are 580 and higher and do not have a 20% down payment.
An FHA Loan means the loan is insured by the Federal Housing Administration (FHA). The FHA protects lenders against defaults on payments. This makes it easier for you to qualify and allows lenders to offer lower interest rates.
For an FHA Loan you will need:
- A minimum 3.5% down payment
- A minimum FICO® Score of 580
- A debt-to-income ratio (DTI) of no more than 50% and a steady employment history
- Money to cover the upfront mortgage insurance premium (UFMIP). The amount is usually equal to 1.75% of your loan amount.
- Money to cover closing costs, which could be anywhere from 2% – 6% of the purchase price.