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FHA Loans

Monday, April 17, 2023   /   by Abby Kurtz-Lendner

FHA Loans

If you're looking to purchase a home, one option that may be available to you is an FHA Loan. While we are not a lender, we do work with several amazing, local lenders that can help advise you on the best route for you, to determine your buying power, and break down the numbers!

FHA Loans are backed by the Federal Housing Administration and can be a great choice for first-time homebuyers or those with limited financial recourses. In this blog, we'll take a closer look at FHA loans and what you need to know before applying.

What is an FHA Loan?

An FHA loan is a mortgage that is insured by the Federal Housing Administration. The FHA is a government agency that was created in 1934 to increase homeownership in the United States. FHA loans are designed to help people with lower credit scores or limited financial resources qualify for a mortgage.

One of the benefits of an FHA loan is that it requires a lower down payment than a conventional mortgage. While conventional mortgages typically require a down payment of at least 20%, an FHA loan may only require a down payment of 3.5%. This can be a significant help for those who don't have a large amount of savings.

Another advantage of an FHA loan is that it is easier to qualify for than a conventional mortgage. While conventional mortgages typically require a credit score of 620 or higher, FHA loans may be available to borrowers with a credit score as low as 500. However, borrowers with a credit score below 580 will be required to put down a larger down payment.

FHA loans also have limits on the amount that can be borrowed. The limits vary depending on the location of the property, with higher limits in areas with higher housing costs. In 2021, the FHA loan limit for a single-family home in most areas of the country is $356,362.

What are the requirements for an FHA loan?

To qualify for an FHA loan, you'll need to meet certain requirements. These include:

  • A minimum credit score of 500 (for a 10% down payment) or 580 (for a 3.5% down payment)
  • A debt-to-income ratio (DTI) of no more than 43%
  • A steady employment history or income source
  • A property appraisal to determine the value of the home
  • Mortgage insurance premiums (MIP) paid throughout the life of the loan

It's important to note that while FHA loans may be easier to qualify for than conventional mortgages, they are not guaranteed. Lenders will still review your credit history, income, and employment history to determine if you are eligible for a loan.

What are the pros and cons of an FHA loan?

Like any type of mortgage, there are both advantages and disadvantages to an FHA loan. Some of the pros include:

  • A lower down payment requirement
  • Easier qualification standards
  • Lower credit score requirements
  • Competitive interest rates

However, there are also some cons to consider:

  • Mortgage insurance premiums (MIP) are required throughout the life of the loan, which can increase your monthly payment
  • There are limits on the amount that can be borrowed
  • The appraisal process can be more stringent than with a conventional mortgage

Overall, an FHA loan can be a great option for those who are looking to purchase a home but don't have a large down payment or high credit score. However, it's important to weigh the pros and cons carefully and to work with a reputable lender to ensure that you are getting the best possible terms for your loan.


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"The Cole Team"
Brenda Cole
1337 Cape Coral Pkwy East
Cape Coral, FL 33904
239-542-3332


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The source of this real property information is the copyrighted and proprietary database compilation of the Southwest Florida MLS organizations Copyright 2025. Southwest Florida MLS organizations. All rights reserved. The accuracy of this information is not warranted or guaranteed. This information should be independently verified if any person intends to engage in a transaction in reliance upon it. The property information herein is derived from various sources that may include, but not be limited to, county records and the Multiple Listing Service and it may include approximations. Although the information is believed to be accurate, it is not warranted and you should not rely upon it without personal verification.
mls logo© 2025 My Florida Regional MLS DBA Stellar MLS, Inc.. All rights reserved. The data relating to real estate displayed on this website comes in part from the Internet Data Exchange (IDX) Program of My Florida Regional MLS DBA Stellar MLS, Inc. All listing information is deemed reliable but not guaranteed and should be independently verified through personal inspection by appropriate professionals. Listings displayed on this website may be subject to prior sale or removal from sale; availability of any listing should always be independently verified. Listing information is provided for consumers' personal, non-commercial use, solely to identify potential properties for potential purchase; all other use is strictly prohibited and may violate relevant federal and state law.2/18/2025 10:52 PM CST
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