The Federal Housing Administration (FHA) runs several programs to promote home ownership. These programs are popular because they allow borrowers to buy a home with a smaller down payment than is required by most other lenders. FHA loans make it easier for people to qualify for a mortgage, but they're not for everybody. Almost anybody can qualify for a loan. There are no income limits - like you may find with first time home buyer programs. However, there are limits on how much you can borrow. In general, you're limited to modest loan amounts relative to home prices in your area. you have to have decent credit. You don't need outstanding credit to get an FHA loan. These loans are not perfect, but they are a great help to some borrowers. They allow people to buy a home with a down payment as small as 3.5%. Other loan programs generally require a much larger down payment.

FHA offers a few other bells and whistles as well:

Easier to use gifts for down payment and closing costs
No prepayment penalty
An FHA loan may be assumable
Possible leniency during financial hard times
Funding for home improvement

The FHA promises to pay lenders if a borrower defaults on an FHA loan. To fund this obligation, the FHA charges borrowers a fee. Home buyers who use FHA loans pay an upfront mortgage insurance premium of 1.5%. They also pay a modest ongoing fee with each monthly payment.If a borrower defaults on an FHA loan, the FHA uses collected insurance premiums to pay off the mortgage.

Take loan applications
Process loan applications
Underwrite and close the loan

If your credit is less than perfect, FHA might be the loan for you. You may qualify for an FHA loan even though you have had financial problems.

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