What is an FHA Loan?

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FHA Loan

An FHA loan is a mortgage backed by the government and insured by the Federal Housing Administration. FHA loans require an individual to have a low minimum credit score as well as a down payment compared to conventional loans. This is why many potential homebuyers look to FHA loans first. If you are considering applying for FHA loans in Las Vegas, or another location, be sure that you know your budget, gather all your documents, and compare your offers.

How do FHA loans work?

FHA loans are available in 15-year and 30-year fixed terms. However, they do come with interest rates. Since the underwriting standards are pretty flexible, they are created to help individuals who may not otherwise qualify for a private mortgage when looking to become a homeowner.

Borrowers must also pay FHA mortgage insurance, that was created to protect the lender from a potential loss in the event the borrower defaults on their loan. If a borrower puts down less than 20 percent, mortgage insurance is required. All FHA loans require borrowers to pay a couple of different types of mortgage insurance premiums, including an annual mortgage insurance premium and an upfront mortgage insurance premium.


To be eligible for an FHA loan, all borrowers must at least have the following qualifications:

  • An employment history for the last two years that is verifiable
  • Have an FICO score of at least 500 to 579 and can put at least 10 percent down, or have an FICO score of at least 580 with at least 3.5 percent down.
  • Have income that is verifiable through paystubs, bank statements, and tax returns.
  • Have a debt income ratio of no more than 31 percent of your gross monthly income.