WHAT IS A FHA LOAN? An FHA loan is a type of loan from the Federal Housing Association for first-time buyers and folks who might have difficulty getting approved for a conventional mortgage when buying a home. Allowing down payments as low as 3.5% with a 580 FICO, FHA loans are helpful for buyers with limited savings or lower credit scores.
To get an FHA loan, you’d have to work with an FHA-approved lender, which could be a bank, credit union, or mortgage company. Then, the FHA guarantees the loan, so your lender doesn’t lose money. To qualify for an FHA loan, you must satisfy several requirements, and lenders may have additional stipulations. Simply put, we don’t recommend FHA loans because they’re one of the most expensive types of mortgages. You might not realize this if you only look at how much money the FHA "saves" you on the front end. But if you want to win with money, consider total cost.
The problem is that an FHA loan can ultimately cost thousands more.
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