One of the easiest mortgage loans to qualify for is the FHA Loan. The downpayment for this type is low and you get a chance of approval even if you have a less-than-perfect credit history. This type of loan is guaranteed by the Federal Housing Administration (FHA), which is part of the U.S. Housing and Urban Development (HUD). FHA does not loan money, rather, it insures the mortgages. That means the loans are still funded by private lenders, but the government insures them against default. There are many advantages of choosing an FHA loan in buying your home.

Benefits of an FHA Loan

• Low downpayment. FHA requires as little as 3.5% downpayment, while conventional loans require atleast 5% or more.

• FHA loans are assumable. With this type of loan, buyers don’t have to take out new mortgages at the current mortgage rate as they can actually take over the seller’s existing FHA loans.

• Easier to apply for those with credit issue. Another great thing about FHA loans is that many lenders do not give high interest rate penalty for those with bad credit scores. Once approved, some financial institutions offer the same interest rate for all borrowers.

• Application is easier even for those with no credit history. Lenders may not require borrowers to show a credit report. They may just look at payment records such as rent payments and utilities.

The FHA loan programs are designed for people who want to own a house but with less available cash.  FHA Loans are also ideal for first-time home buyers because of its low credit requirements.

FHA Loans are easy to apply, making them ideal for first-time home buyers and buyers with low credit score.