What Is an FHA Mortgage Loan
An FHA loan is insured by the Federal Housing Administration. The features of an FHA loan include a low down payment and low closing costs. A borrower pays a mortgage insurance premium which protects the lender in the event of a default. An FHA loan allows for better rates and terms. A credit score of at least 580 is required for an FHA loan. Borrowers with debt higher than the allowed debt-to-income ratio can be approved with compensating factors such as a larger downpayment, good credit history, and cash reserves. Borrowers can qualify for an FHA loan 2 years after a bankruptcy, short sale, or foreclosure, which is shorter than the 4 year waiting period that was once required.