Federal Housing Assistance (FHA) Loans are the most prominent government-backed loans available to first-time home buyers and those looking to refinance their current home mortgage. Similar to VA home loans, FHA home loans are not loans provided directly from the federal government, but rather loans backed by the government.
Because they are guaranteed by the government, FHA Loans allow first-time home buyers to purchase homes at only a 3.5 percent down payment.
The only stipulation to this is your credit score. You need at least a credit score of 580 to qualify for the 3.5 percent down payment. If your credit score is below 580 and 500, you will still be eligible, but you will need to pay a downpayment of 10 percent instead of 3.5, which is still lower than average.
To apply for an FHA home loan, you will need to meet the requirements stated above and be a first-time home buyer.
Additionally, you will need to find an FHA approved lender who can show you which types of homes you can be approved for.
Your FHA lender will also help you when it comes time to put your down payment on the property you are interested in. All you need to do is fill out an FHA home loan application and turn it into an FHA approved lender.
Information on FHA approved lenders can be found on the U.S. Department of Housing and Urban Development website as well as in your local housing agency.