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FHA Loans

The loan most people have heard of is FHA. FHA is short for the Federal Housing Administration. It’s a department within Housing and Urban Development (HUD) and is run by the Federal Government. FHA is geared toward first time buyers however; you do not need to be a first time buyer to utilize this loan. There are several benefits to FHA over other forms of financing.

Down Payment

First, it has a reduced down payment compared to conventional financing. FHA minimum down payment is 3.5% of the purchase price now as opposed to the old requirement of 2.25%. Additionally, these funds do not need to be the borrowers own funds. Borrowers are allowed to get money for a down payment from a gift from a relative, grants, employer, or a 401k loan.

Minimum Score

Although FHA does not technically have a required minimum credit score, all loan investors and servicers have a minimum score of 580. The industry often bases the minimum credit score on an Automated Underwriting System feedback report to determine acceptable credit scores.


Yes, rates do tend to be a bit more aggressive with FHA as compared to Conventional Financing which is very sensitive to credit scores and higher loan-to-value loans. FHA is the best financing available for you both. Conventional interest rates would be quite a bit higher depending on scores and would require at least 3% down payment (620 required) or 20% down payment.

Easier credit qualifying, lower down payments and lower monthly payments all make FHA an excellent choice for first time buyers!