FHA Loans provide homeownership opportunities to borrowers with less impressive credit for as little as 3.5% down. If it’s your first time purchasing a home or if you’ve had some trouble with your credit in the past, this could be a great option for you.
These loans don’t conform to the limits for Fannie or Freddie, rather the limit for areas in the US is 115% of the median home price for the county (which is set by the US Dept. of Housing and Urban Development). For the lowest down payment - 3.5% - the minimum credit score required is 580 but borrowers with credit scores between 500-579 can get an FHA loan for 10% down.
Similar to conventional loans, FHA loans require monthly mortgage insurance. Unlike conventional loans, however, these loans also require an upfront Mortgage Insurance Premium (MIP) of 1.75% at closing.