Loans insured by the Federal Housing Administration (FHA) are usually the easiest and most flexible types of mortgage loans to secure. The FHA doesnâ€™t originate loans, but instead, insures lenders against losses in case of default thus providing mortgage lenders the opportunity to originate loans to higher risk borrowers like those who may be credit challenged or those who may lack a mortgage payment history like first-time home buyers.
In todayâ€™s tight credit housing market, FHA-insured loans give borrowerâ€™s who might have had a couple credit blemishes or might have a limited credit history the opportunity to purchase a home that they would not have had if trying to qualify for a conventional mortgage.
The down payment requirement for FHA-insured loans are also far less than a conventional mortgage, sometimes as low as 3.5 percent, and the credit requirements and debt ratio are far more flexible.
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