FHA Loans (Federal Housing Administration)

FHA loans allow a borrower to purchase a home with a minimum down payment of 3.50%.  A typical Conventional loan would require at least 10%, but preferably 20%.  

FHA loans allow a blemished credit history.  You may qualify for an FHA loan even though you have had financial problems.  You can obtain an FHA loan two to three years from the date of your bankruptcy discharge, as long as you’ve maintained good credit since your debts were discharged.  If you keep your credit in excellent shape since a foreclosure, an FHA loan will be available to you two to three years from the final date of your foreclosure.

Mortgage insurance is funded into the loan, meaning a premium of 1.75% is added to the loan balance instead of being paid out-of-pocket. In addition, a percentage of 1.35% of the loan amount is added to your monthly payment in the form of mortgage insurance.