What is an FHA loan?
An FHA mortgage is a government-backed home loan with more flexible lending requirements than those for conventional loans. Because of this, interest rates for FHA mortgages may be somewhat higher, and the buyer may need to pay monthly mortgage insurance premiums along with their monthly loan payments. FHA loans are insured by the Federal Housing Administration (FHA) and may have an easier qualification process due to less stringent down-payment and credit requirements than conventional mortgages. Note: If you’re a current military member or veteran, you may be eligible for a VA home loan with little or no down payment.Benefits and considerations
Lower down payments An FHA mortgage may require a down payment as low as 3.5 percent, although the interest rate may be somewhat higher than with a conventional mortgage. Lower credit thresholds One of the benefits of the FHA loan program is that home buyers may qualify even without a long credit history or outstanding credit. Popular for refinancing Many borrowers with newly adjusting ARMs look to refinance into fixed-rate FHA loans. Learn more about your refinance options.Requirements and qualifications
- Loan amount – FHA home loans have maximum mortgage limits that vary by state and county. In Utah the limit is $510,400 for 2020.
- Down payment – FHA loan guidelines require a minimum down payment of 3.5 percent.
- Property condition – FHA loans require that the home being purchased must meet certain conditions and be appraised by an FHA-approved appraiser. New FHA loans are available only for homes that will be used as the buyer’s primary residence.