FHA Loans


These loans are insured by the Federal Housing Administration. They are specifically designed to help borrowers who cannot buy homes using traditional mortgages, and come with altered terms that make purchasing a home easier.

Quick Summary

Worried about qualifying for the right mortgage for your first house? Start by looking at FHA loans. The insurance that the FHA provides for these loans greatly reduces their risk, which means that lenders are more willing to finance first-time homebuyers and those with poorer credit ratings. FHA loans focus on low down payments, so that you don't need to have a lot of cash saved up to buy the home you want. They also work to lower closing costs and interest rates. However, there are also some additional requirements for these loans.

Pros and Cons


-Low cost home loans ideal for first-time buyers. If you can qualify for an FHA loan, it can help you save a lot of cash if you are buying your first home. This expands your options while saving you money – for many homebuyers, that's a classic win-win.

-Several loan products for different situations. Certain FHA loans are designed for seniors, those who want to make energy improvements, those buying manufactured housing, and more. This makes it easier to find a loan that fits your current situation.


-Not everyone offers them. FHA loans are only offered by lenders with the proper certification to do so. Fortunately, this includes many major lending organizations – but it will decrease your available pool of lenders.

-Low down payments come with a cost. That low down payment can save you a lot of cash now, but it means that your principal and interest payments will be higher. Additionally, banks may require you to pay an extra monthly fee for mortgage insurance. This may ultimately cost you more money in the long run.

What Else Should I Know?

There are several different kinds of FHA loans with unique advantages, and the FHA periodically updates these loans based on the current housing market. Examine your options carefully and take a long look at the amortization tables to understand how the ultimate costs of the loan compare to traditional mortgages. Remember that the FHA loan program may work in concert with local and state programs if you are interested in additional financial assistance.