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  • Writer's pictureNick T.

How to Acquire an FHA Loan

What is an FHA Loan?

An FHA loan is a home mortgage that is issued by the Federal Housing Association. FHA loans typically require a lower minimum down payment when compared to conventional loans. They are intended for borrowers who are unable to obtain loans from private lenders due to a lack of savings or a poor credit score. Since the loan is insured by the FHA, banks are more willing to loan money to homebuyers with lesser credentials. Even if you have bankruptcies in your financial history, you may still qualify for an FHA loan.

How Do FHA Loans Work?

Depending on your credit score, an FHA loan will allow you to borrow a set percentage of a home’s value. If your credit score is over 580, you can borrow 96.5% of a home’s value with a 3.5% down payment. If your credit score is below 580, you can typically still obtain an FHA loan with a 10% down payment. Interest rates are usually lower when compared to conventional mortgages. Your interest rate will vary depending on your credit score, income, and debt to income ratio among other factors. If you need a credit card with great rates, check out this online resource.

FHA Loan Specifications

In order to be qualified for an FHA loan, your home must be appraised by an FHA-approved appraiser. You will only qualify for an FHA loan on a house that you intend to occupy as your primary residence. You are required occupy the home within 60 days of your closing date. You must provide proof of income, including a steady employment history.

How Do You Apply?

The first step in obtaining an FHA loan is to select an approved lender. Many banks and financial institutions offer FHA mortgages. Once you choose a lender, you can begin the application process by providing the necessary documentation.

Additional Fees

When applying for a large loan, it’s critical that you develop a thorough financial plan. Make sure you budget 3-6% of your home’s value in order to cover closing costs, and about 3% for home maintenance and repairs.

Different Types of FHA Loans

In addition to home purchase, the Federal Housing Association offers cash-out refinance loans, and rate/term refinance loan with unique benefits. If you are currently a homeowner, consider researching these alternative options to determine if an FHA loan could benefit you.


While FHA loans can be a great choice for individuals who are struggling to obtain a mortgage, it’s important to weigh your options carefully. Before you apply, evaluate your finances to ensure that you are prepared to make your loan payments and all associated costs.

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