FHA Mortgages

In the last five years a high percentage of first time home buyers used FHA mortgages to get the financing that enabled them to become a homeowner. Lenders like FHA loans because they get approved at a higher rate than conventional mortgages do. Borrowers like FHA mortgages because they are more open-minded when it comes to credit guidelines on home purchase and refinance transactions. The reality is that the Federal Housing Administration continues to approve home loans on borrowers who have credit scores as low as 500. Most FHA loan lenders are looking to approve borrowers with credit scores above 580, but the agency recently confirmed that 500 is the minimum fico score for borrowers that can demonstrate compensating factors.

FHA Mortgages Enable a Borrower to Finance a House with only 3.5% Down

FHA mortgages have been insured by the U.S government since their inception in 1934. The agency was originally founded in an effort to ensure that Americans get access to affordable financing. Their initial focus was to guarantee fair housing, but over the years that agency began expanding their loan programs. Many borrowers prefer FHA home mortgages because they only require a 3.5% down-payment on purchases and allow 96.5% Loan to Value for refinance loans.