The loan most people have heard of FHA. FHA is short for the Federal Housing Administration. It is 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 620, and some 640 and even 660.  Currently our minimum is 620. This is the industry minimum right now for all loans and financing FHA, VA, USDA and Conventional.

Rates:
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 10% down payment (720 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!