FHA Loans
FHA Financing Has Loose Standards: Making Home Ownership Accessible to More People
FHA stands for Federal Housing Administration. FHA loans are backed by the government. This government insurance mitigates the lender’s risk; as a result, FHA financing is easier to qualify for than conventional financing in terms of credit scores and loan-to-income ratios.
The minimum down payment is as low as 3.5%. In the past, this low down payment made FHA financing attractive to buyers with little savings. Nowadays conventional financing is available for only 3% down. So in most cases, buyers select FHA because they have difficulty qualifying for a conventional loan.
