Quick Definition

An FHA loan is a mortgage insured by the Federal Housing Administration, designed to help lower-income and first-time homebuyers purchase a home.

Examples

• 1A first-time homebuyer with a modest income qualifies for an FHA loan to purchase a $200,000 home with a lower down payment than typically required.
• 2A family with a lower credit score that would prevent them from obtaining a conventional loan can secure an FHA loan due to its more lenient lending standards.
• 3A homeowner uses an FHA loan to refinance their existing mortgage, taking advantage of the lower interest rates and reduced closing costs offered by FHA loans.

Tags