An FHA loan permits you to buy a home with a tiny 3% down, as an alternative of the higher percentages required securing a lot of conventional loans. Taking advantage of the FHA loan program is a big way for first time buyers, or anyone with a lack of down payment money, to buy a home.
FHA does not create home loans--it insures them. If a home buyer defaults, the lender is paid from the mortgage insurance fund. To obtain an FHA home loan, you'll need to have a fair credit history, no late payments in the last twelve months, letter of explanation on ant late payments in the past and sufficient income to qualify for the loan.
FHA home loan