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FHA Loans

FHA Loans help borrowers who are looking for a mortgage option with lower down payment requirements and credit flexibility.

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Less Money Down and
Flexible Credit Requirements

The Federal Housing Administration (FHA) back mortgage loans called FHA Loans. This type of home loan helps borrowers who may be struggling to save a large down payment or build up their credit purchase a home. FHA Loans offer flexible down payment requirements (often as low as 3.5%) and lower credit score requirements (often as low as 580).

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What is an FHA Loan?

FHA Loans are a mortgage option for borrowers who would like to buy a house but need more relaxed guidelines. FHA Loans are insured by a government agency called The Federal Housing Administration, which means that they’re backed by the government.

This doesn’t mean the government lends you the money for your mortgage. Banks and FHA approved mortgage lenders, like Newfi, will lend you the mortgage loan.

Because FHA Loans are backed by the government and require borrowers to pay FHA Mortgage Insurance, the Federal Housing Administration is able to offer more relaxed guidelines. The banks and FHA approved lenders are able to lend to borrowers that meet FHA requirements because the government is guaranteeing the mortgage will be paid, regardless of whether the borrower defaults on the loan. 


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How Does an FHA Loan Work?

These mortgages work like other mortgage options available to you! You’ll qualify based on things like your current credit score, debt-to-income ratio, how much money you’re able to put as a down payment, your income and employment verification, and a number of other factors.

However, it is important to remember that the Federal Housing Administration does have specific requirements–alongside things like credit and down payment–that you’ll need in order to qualify:

  • An FHA Appraisal 

  • FHA Mortgage Insurance

Frequently Asked Questions

Who Qualifies for an FHA Loan?

You do not have to go through the Federal Housing Administration to see if you can qualify for an FHA Loan. However, you will need to work with an FHA approved bank or lender and you will be required to get an FHA Appraisal. As long as the borrower meets the requirements for a FHA Loan and the appraisal is approved by the FHA, they can qualify.

What are the Benefits of a FHA Loan?

  • As Low as 3.5% Down Payment Requirements
  • 30-Year Fixed Rate Loan Terms
  • Low Credit Scores Accepted, as Low as a 580 FICO 
  • Gift Funds Are Accepted to Cover 100% of Your Down Payment
  • More Relaxed Debt-to-Income Requirements
  • Refinancing Options Available with an FHA Streamline Refinance

What are the Disadvantages of a FHA Loan?

  • You’ll be required to have FHA Mortgage Insurance for some or all the duration of the mortgage loan. This means that your total monthly payment may be higher than other mortgage options.
  • Interest rates on FHA Loans may be higher compared to a Conventional Home Loan.
  • You’ll need to provide proof of stable income and employment for the previous two years.

What is an FHA Appraisal?

Almost every mortgage requires an appraisal of the home to determine its worth and livability. However, FHA appraisals have minimum standards that are set by the Federal Housing Administration and must be met in order to qualify for the FHA Home Loan. 

What is an FHA Mortgage Insurance Premium?

FHA Mortgage Insurance Premiums (MIP for short) are a fee that lenders add on to a borrower’s monthly mortgage payment if the borrower was unable to put 20% down on their home. 

What are My Other Low Down Payment Mortgage Options?

  • Conventional Mortgages
    • Conventional mortgages allow you to borrow with as little as 3% down. A conventional mortgage with a down payment less than 20% requires private mortgage insurance (PMI), but you can cancel mortgage insurance once you have paid off 20% of the value of your home. Minimum credit scores are somewhat higher than those needed for an FHA loan, but monthly mortgage insurance premiums are often lower.
  • VA Home Loans
    • Many borrowers who served or are serving in the US military are eligible for zero down payment VA mortgages. No mortgage insurance is required, and interest rates are low. 
  • USDA Home Loans
    •  A zero down payment loan for lower-income residents in rural areas, this affordable, government-backed loan requires an annual guarantee fee.

How Do FHA Loans Compare to Conventional 30-Year Fixed Rate Home Loans?

Conventional Mortgages offer some borrowers the ability to purchase a home with as little as 3% down.

While that may be a little less than an FHA Loan, Conventional Mortgage have minimum credit score requirements that are somewhat higher than those needed for an FHA loan.

Conventional Mortgages that have a down payment less than 20% will also require a type of mortgage insurance called Private Mortgage Insurance (PMI). Comparatively however, PMI often offers lower monthly insurance premiums. Conventional Loans also offer borrowers the ability to cancel mortgage insurance once they have paid 20% of the value of their home.

Can I Refinance My FHA Loan?

Yes! With a FHA Streamline Refinance (Link), borrowers are able to refinance their FHA Mortgage for a new mortgage option or to update their rate and term.

What are Current FHA Loan Rates?

Your exact FHA Loan rates will depend on the mortgage you choose, the rate you qualify for and the terms you select. Contact us to review your options and calculate your payments.

What is the First Step in Getting a FHA Loan?

Because everyone has their own unique situation, we recommend speaking to a loan advisor about your options as your first step. Go to or fill out the form on this page for a free consultation with one of our licensed loan advisors to learn about what documentation and qualifications you may need!

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