FHA loans are an attractive option, especially for first-time homeowners because it is insured by the Federal Housing Administration (FHA). Primarily, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments. Typically, the borrower can be approved with 3.5% down vs 20% that is required on other loan programs.
How exactly does an FHA loan work?
FHA loan works much like a conventional mortgage, from the borrower’s point of view. You won’t get a loan from the Federal Housing Administration. You’ll apply for an FHA loan through an FHA-approved lender. The FHA insures the loan, which is why lenders’ requirements for FHA borrowers tend to be more lenient.
Is it difficult to qualify for an FHA loan?
FHA provides mortgage programs with lower requirements. This makes it easier for most borrowers to qualify, even those with questionable credit history and low credit scores. FHA loans offer low-interest rates to help homeowners afford their monthly housing payments.
How long does an FHA loan usually take?
FHA loans take about the same amount of time to be processed as a conventional or VA loan, approximately 45 days. That includes the entire process, from the loan application to the final approval and closing.