Simply put, FHA loans are insured by the government. That reduces the risk for lenders who make those loans.
Since they are insured, lenders will relax requirements a bit. FICO scores do not necessarily determine worthiness. There is room for flexibility. You do need to know the lenders can add their own requirements and those can vary.
Down payments as low as 3.5% make this an attractive 0ption, particularly if a buyer doesn’t have equity to make a larger down.
Closing costs are allowed as well. Combined with low down payments, this could potentially help reduce up front costs. Unfortunately, this could result in higher interest rates.
You may need to shop around a bit as not all lenders are FHA approved and, even if they are, they may have different rates and fees.
FHA loans do require mortgage insurance. This has gone up considerably with an upfront cost of 2.25%…
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