An FHA loan is a mortgage loan insured by the Federal Housing Administration (FHA), a U.S. government agency. These loans are designed to help homebuyers with lower credit scores or limited funds for down payments by offering more lenient borrowing requirements compared to conventional loans. Lenders issuing FHA loans are protected against default, as the FHA provides mortgage insurance to cover potential losses. FHA loans typically require a minimum down payment of 3.5% and have more flexible credit score requirements.
Related real estate terminology:
Conventional loan
Mortgage insurance
Down payment
Credit score
Debt-to-income ratio (DTI)
Loan-to-value ratio (LTV)
FHA mortgage insurance premium (MIP)
VA loan
USDA loan
References:
- Investopedia: FHA Loan Basics
- NerdWallet: What Is an FHA Loan?
- Federal Housing Administration: FHA Loan Information
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