Popular with first-time homebuyers
Federal Housing Administration (FHA) mortgages are loans issued by federally qualified lenders. These loans are insured by the Federal Housing Administration. FHA loans offer an attractive interest rate and more flexible qualifying requirements than conventional mortgages. They’re designed for low-to-moderate income borrowers with smaller available down payments and lower credit scores. As of 2016, FHA loans permit the borrower to borrow up to 96.5 percent of the value of the home. The remaining 3.5 percent down payment can come from a gift or a grant. This last stipulation makes FHA loans popular with first-time homebuyers. The refinance of an existing FHA loan may be accomplished without an appraisal or an income requirement.