If you’ve never owned a home before, the buying process can be beyond daunting. Do you have enough money for a down payment? How much do you really have to put down, anyway? Is your credit score high enough? Will the fine print of your mortgage agreement leave you with empty pockets?
FHA loans, backed by the Federal Housing Administration, were designed to encourage home ownership for those who might otherwise find it difficult to secure a loan.
The FHA itself doesn’t provide the loan, but they provide mortgage insurance that makes sure the lender doesn’t lose out if you are unable to pay back the loan. This means that people with lower credit and smaller down payments can still secure the loan they need to become homeowners – which is a real game-changer.
FHA loans are not ideal for everyone, and there are caveats, but for many young people or those recovering from financial problems, they are the best (or only) option. See why: