What is an FHA mortgage*?
An FHA mortgage is issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low-to-moderate income borrowers and have more flexible lending requirements. FHA loans allow the borrower to borrow up to 96.5% of the appraised value of the home. Since they are backed by the FHA, the down-payment requirement is less stringent and the 3.5% down payment requirement may be provided to the borrower from a gift or grant. The lower downpayment requirements and less stringent qualification process, makes the FHA loan very favorable amongst first-time home buyers.