Benefits of an FHA-Insured Loan

If one or more of the following situations apply, then an FHA-insured loan may be right for you:

• You're a first-time homebuyer.
• You don't have a lot of money to put down on a house.
• You want to keep your monthly payments as low as possible.
• You're worried about your monthly payments going up.
• You're worried about qualifying for a loan.
• You don't have perfect credit.
• You're worried about what will happen if you fall behind on your payments.

FHA-insured mortgages offer many benefits and protections that you won't find in other loans including:

Lower cost: FHA-insured loans have competitive interest rates because the Federal government insures the loans for lenders. Always compare an FHA-insured loan with other loan types.

Smaller downpayment: FHA-insured loans have a low 3.5% downpayment and the money can come from a family member, employer or charitable organization as a gift. Other loan programs don't allow this.

Easier qualification: Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.

Less than perfect credit: You don't have to have perfect credit to get an FHA-insured mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for an FHA-insured loan than a conventional loan.

Read "Shopping for a Mortgage?", FHA improvements benefit you, a collaborative brochure from the FHA and the National Association of Realtors.

The FHA does not give money to people for a home and it does not set the interest rates on mortgages it insures. FHA insures loans for lenders against defaults. For the best interest rate and terms on a mortgage, you should compare mortgages from several different lenders. An FHA-approved lender can help you start the loan application process.

You may use an FHA-insured mortgage to purchase or refinance a new or existing 1- to 4-family home, a condominium unit or a manufactured or mobile home (provided it is on a permanent foundation).

FHA-Insured Loans Compared to Subprime Loans

Mortgage Insurance Requirement