Imagine being able to purchase your first home with as little as 3.5% down. For many people, the FHA home loan makes owning a home a reality. While the down payment is small, there are a number of qualifications you must meet before you can apply for such a loan. Even the house you wish to purchase must be carefully considered and meet special qualifications. However, once the qualifications are met, this is an excellent option for home buyers.

home mortgage

What Is a FHA Home Loan?

According to Zillow, “An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA). Essentially, 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.” These loans are extremely popular with first-time home buyers.

What Are the Qualifications?

While the FHA home loan is usually the easiest loan to qualify for, there are many qualifications that must be met. First of all, you must have proof of steady employment for at least 2 years. You must also be able to prove that you are a legal United States citizen. A 3.5% down payment must be made and can be a gift from a family member. The house being purchased under the loan must be the primary residence of the home buyer. The property must be appraised by an FHA-approved appraiser and meet strict income ratio guidelines. A minimum credit score of 580 is required for loans with 3.5% down. A credit scare of 500-579 is permitted when a 10% down payment is provided. If you had previous credit problems, you need to have reestablished good credit and it have been 2 years since you filed bankruptcy or 3 years since you foreclosed on a home.

How Does One Apply?

Once you meet the qualifications you can begin shopping for a FHA home loan with local banks or through the internet. You can get an estimate on sites like and others. The advantage to shopping for home loans online is that you can easily get quotes from several banks by filling out one application. Be sure to carefully review each quote so that you get the best terms possible.

An FHA home loan is a wonderful option for those that have low credit scores and little money for a down payment. However, you need to make sure you meet the qualifications before applying. Once you’re ready to apply, see which banks in your area offer these loans or go online and get a quote from several banks at once. Either way, always compare the results so that you get the best terms possible.