FHA loans have less rigorous standards than conventional loans
- A borrower’s credit score for an FHA loans must be at or above around 580, which is considerably lower than a conventional loan.
- One pays a lower down payment on an FHA loan, where conventional loans are at a 5% to 20% down payment. FHA loans are 3.5% to 10%. Specific percents for down payments are determined by borrowers credit.
- The FHA does not necessarily require credit history.
- Fixed rate of interest.
- FHA requires mortgage insurance when borrowers pay down less than 20% on the loan. FHA loans require the borrower to pay an upfront premium and an annual premium mortgage insurance. The borrower pays the upfront as the borrower gets the loan, and they pay an annual payment every month. The upfront is typically 1.75% of the loan amount, and the annual payment is typically .85% of the loan amount.
Cash repair FHA loans
- The FHA has a special loan for borrowers to make cash repairs to their homes.
About the lenders
- Borrowers recieve their home loans from FHA approved lenders, so some lenders differ on their rates and costs for the same loan.
- If there was a default or a loss on the loan, the FHA would cover it, so that the lender would be safe.