Industry Insight
December 15, 2021

What is an FHA Home Loan

What is an FHA Home Loan?

An FHA loan is a mortgage that is backed by the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development. FHA loans are issued by FHA-approved lenders and are insured by the FHA. These loans are designed to expand access to homeownership for borrowers who might not qualify for a conventional home loan. FHA loans help people with lower incomes, down payments, and/or credit scores become homeowners. 

To begin applying for an FHA loan with Neat, check out our easy, online application.

FHA loans for first-time homebuyers and other borrowers

FHA loans appeal to various types of borrowers because they are easier to qualify for than conventional loans. Many first-time homebuyers prefer FHA loans since these borrowers may not have saved up for a significant down payment. Also, people who have higher debt or less-than-stellar credit, as well as those who have had a foreclosure or bankruptcy in the past may qualify. 

How to qualify for an FHA loan

The FHA sets the minimum requirements to qualify for an FHA loan. The 2021 FHA loan requirements are:

  • A 3.5% down payment (if you have a FICO® score of at least 580) 
  • A 10% down payment (if you have a FICO® score of 500 to 579)
  • A debt-to-income (DTI) ratio of less than 43 percent
  • The home must be your primary residence
  • You must have a steady income and proof of employment
  • Mortgage insurance premium (MIP) is required

Which is a better loan, FHA or conventional?

If you’re wondering whether an FHA loan or a conventional loan is best for you, consider the following comparison:

How to get an FHA loan

FHA loans are issued by most lenders, so it’s easy to apply for an FHA loan online. You can use the HUD’s Lender List Search to find approved lenders. 

Contact a few different lenders to compare rates. Comparing different FHA home loan offers could save you thousands over the life of your loan. Try to get all of the loan estimates on the same day since mortgage interest rates are constantly changing. 

Also, be sure to make an apples-to-apples comparison. For example, you wouldn’t want to compare a 15-year fixed mortgage with a 30-year fixed mortgage. Compare offers on the same type of FHA home loan. Once you’ve found an ideal offer, let the lender know you’d like to proceed. Neat Loans offers FHA loans at competitive rates for qualified borrowers.

Doing your research can help ensure you find the loan that’s right for you, and you’ll be that much closer to relaxing in your new home!

When you are ready to apply for your FHA mortgage loan, click here to access all of Neat's free tools, calculators, and our easy, online application.

Thanks for reading! Please note that this content is intended for educational purposes only. As laws and lender requirements change regularly, you should speak to a home loan advisor about your particular situation. If you’re interested in purchasing or refinancing a home,  check out today's mortgage rates or get pre-approved in 3 minutes.

Jen Farmer

Chief Marketing Officer
Top-performing marketing leader with consistent appointments to higher levels of seniority at a $15B S&P 500 healthcare corporation. Broad B2B and consumer marketing experience in both strategy and execution, leveraging an analytical mindset with a Master’s level foundation in writing and communi...