What is an FHA Loan?
For more than 80 years, FHA loans have helped create an affordable path to home ownership for Americans. Can they help you join the ranks of successful home owners? Learn more to find out.
An FHA loan is a mortgage backed by insurance provided through the Federal Housing Administration. The key is this: by providing federally-backed insurance for mortgages, the FHA encourages lenders to make mortgages available to borrowers with less stellar credit histories, and with lower down payments and more reasonable mortgage rates.
Though insured by a federal agency, FHA loans are provided by private lenders, giving you the freedom to shop around and find the best deal for your situation.
How to Get An FHA Loan
Here are some simple steps towards getting an FHA loan:
- Check your credit history. Make sure it is accurate and see if there are any problems you can clear up before applying for a loan.
- Start saving for a down payment. FHA loans only require a down payment of 3.5 percent, though if you can afford a larger one it will lower your long-term costs.
- Figure out your housing budget. A combination of how much you can put aside monthly towards a down payment plus your current rental costs, if applicable, is a good indicator of how much of a monthly mortgage payment you'll be able to afford.
- Compare loan rates. LendingTree's FHA page will show you some current loan rates and the site also provides you with the means to get competing loan rates in minutes.
Top 5 Reasons to Get an FHA Loan
Frequently Asked Questions›
- Minimum Credit Score For FHA Loan
What credit score allows me to get an FHA loan?
The minimum FICO credit score required for an FHA loan is 580. If your score is 580 or higher, you are eligible to pay the minimum down payment requirement of 3.5 percent. However, if your score is lower, that doesn't mean you won't qualify. Instead, you'll be required to put down 10 percent, as those with a credit score of less than 580 are limited to a loan-to-value (LTV) ratio of 90 percent. Remember that the better your score, the better interest rate you will receive on your FHA loan.
To see where you stand, view your credit score for free on LendingTree.
- Minimum Down Payment For FHA Loan
What is the minimum down payment for an FHA loan?
If your FICO credit score is a 580 or higher, the minimum down payment requirement is just 3.5 percent. If your score is lower, though, the minimum down payment increases to 10 percent of the purchase prices of the home, assuming all other qualifications are met.
- FHA Loan Fund Provider
Who provides the funds for FHA loans?
The Federal Housing Administration, or FHA, backs loans given by approved FHA-lenders through mortgage insurance. If a borrower were to default on the loan, the FHA will pay a claim to the lender. Unlike other government programs, the FHA fully supports itself. Mortgage insurance paid by homeowners is where funds for FHA loans come from.