The Federal Housing Administration (FHA) home loan is one of the most popular choices among home buyers.

The popularity of the FHA Home Loan is due to its affordability, requiring one of the smallest down payments, and its accessibility due to the programs more relaxed underwriting criteria.

Low Down Payment

One of the biggest home buying hurdles is down payment. Prior to Congress creating the Federal Housing Administration in 1934, prospective homeowners needed 50% down to finance a home…

FHA changed the landscape of American home financing, making homeownership affordable for the masses. Since its inception, FHA has helped over 47 Million households achieve homeownership. Today, purchasing a home with FHA requires just 3.5% down.

Low Interest Rates

FHA Home Loans offer some of the lowest interest rates among all mortgage programs, often even lower than large down payment conventional loans.

How? FHA is actually an insurance program. Approved lenders, like Leaders Credit Union, provide FHA home loans to consumers and FHA insures those loans against default. The result is lenders are exposed to less risk, and accordingly can offer lower interest rates to consumers.

Reasonable Underwriting Criteria

A primary goal of the FHA Home Loan is to make homeownership accessible. One of the ways this goal is accomplished is through underwriting criteria that is more relaxed than some other mortgage financing programs.

Along with a lower credit score minimum requirement, FHA Home Loans also allow a higher debt-to-income (DTI) ratio than many home mortgage programs.

Cost Solutions

Purchasing a home cost money – it’s a reality. Fortunately, beyond a low down payment, FHA Home Loans offer ways to minimize costs if not eliminate them all together.

FHA allows gifts to be applied toward down payment and/or closing costs. FHA also allows sellers to pay toward homebuyers’ closing cost, up to 6% of the home price. Negotiating “seller concessions” is common and in many cases can cover all closing costs.