FHA (Federal Housing Administration) loans are insured by the Federal Housing Administration and backed by the government. As compared to conventional loans, these loans have more flexible lending requirements. Private lenders fund these loans flexibly and have low standards for qualification typically because these loans are insured against default which provides adequate coverage to the lender in case the borrower fails to pay back.

Low Interest Rate

Low interest rate means you can save thousands of dollars over the life of your mortgage as you don’t have to make big monthly loan payments due to high interest rates.

Low Down Payment

FHA loans require a minimum of 3.5 percent down payment. It is significantly lower than the down payment required by traditional loans which is between 5 and 10 percent.

Flexible Repayment Terms

FHA offers two options; a 30 year fixed rate mortgage, or a reverse mortgage, making it super easy for you to pay back

Debt to Income Ratio is not a Barrier

You can qualify for an FHA loan even if your debt ratio is higher than 20 percent. However, your debt to income ratio should be lower than 41 percent.

Liberal Credit History

There is no minimum credit score requirement. You can apply for an FHA loan as long as you don’t have a negative credit history. For those with negative credit history, they can apply for FHA 2 years after a bankruptcy and 3 years after a foreclosure.

Higher Seller Contribution

You can negotiate with the seller to pay most of the closing costs and buy down the interest rate for your loan thereby minimizing your pocket expenses.