A FHA loan makes purchasing a home possible with a down payment as little as 3.50% of the purchase price. The main advantage of a FHA loan is that it typically requires a lower down payment and has greater flexibility for credit qualification. Higher down payment percentages are required to secure many conventional loans. Therefore, taking advantage of the FHA loan program is a great way for a first time buyer, or anyone with limited down payment funds, to buy a home.
Borrowers can use their own savings to make the down payment. However, other allowable sources of cash can include gift funds from a family member.
This may be a perfect mortgage solution for those starting out or those having a difficult time qualifying for a conventional mortgage.