Federal Housing Administration (FHA) mortgages are insured by the FHA and they offer more flexible down payment and underwriting guidelines. They are not just for first-time homebuyers, but are available for all borrowers who qualify – for both purchases and refinances.
Key aspects of FHA financing:
- Minimum down payment is 3.5% for all property types*
- An impound account (see JVM Buyer’s Guide) is always required
- Both an up-front mortgage insurance premium and a monthly mortgage insurance payment are always required. The up-front mortgage insurance premium is typically financed into the loan amount.
- The down payment can be entirely from gift funds
- Lower interest rates than conforming loans
- Can only purchase as a primary residence
- Condos must be FHA-approved