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  • What is a Federal Housing Administration Loan?

    An FHA Loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate-income borrowers, FHA Loans require a lower minimum down payments and credit scores than many conventional loans.

    As of 2020, you can borrow up to 96.5% of the value of a home with an FHA Loan (meaning you'll need to make a down payment of only 3.5%). You'll need a credit score of at least 580 to qualify. If your credit score falls between 500 and 579, you can still get an FHA Loan provided you can make a 10% down payment. With FHA Loans, your down payment can come from savings, a financial gift from a family member or a grant for down-payment assistance.

    All these factors make FHA Loans popular with first-time homebuyers.

  • Key Points

    FHA loans are federally backed mortgages designed for low-to-moderate-income borrowers who may have lower than average credit scores.

    • FHA loans require a lower minimum down payments and credit scores than many conventional loans.
    • FHA loans are issued by approved banks and lending institutions, who will evaluate your qualifications for the loan.
    • These loans come with certain restrictions and loan limits not found in conventional mortgages.

    It’s important to note that the Federal Housing Administration doesn't actually lend you money for a mortgage. Instead, you get a loan from an FHA-approved lender, like a bank, and the FHA guarantees the loan.  Some people refer to it as an insured loan, for that reason.