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Lauren obtained a loan that's insured and that only required a down payment of 3.5%. FHA is most likely the type of loan Lauren has.
A mortgage granted by a bank or other lender that has received the agency's approval is known as an FHA loan since it is guaranteed by the government. Applicants for FHA loans may have lower credit scores than is typically necessary, and they may have lower minimum down payments than many conventional loans.
Low- to moderate-income families can obtain a mortgage with the aid of an FHA loan. First-time homebuyers find them to be particularly appealing.
- FHA mortgages are available to select applicants who have trouble getting loans from private lenders.
- All FHA loans are covered by federal insurance.
- Due to the higher risk associated with FHA borrowers, both interest rates and PMI must be paid.
- Banks are more prepared to lend money to homeowners with relatively low credit scores and little cash to put down on the purchase since they are insured.
- An FHA loan can be the most cost-effective mortgage choice for first-time homebuyers.
Learn more about FHA loan here
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