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What Is an FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration (FHA) and designed to help low-to-moderate income borrowers who may have lower credit scores or limited funds for a down payment.
π‘ Key Features of FHA Loans
Feature FHA Loan
Down Payment As low as 3.5% with a 580+ credit score
Credit Score Requirement Minimum 500 (with 10% down) or 580+ (for 3.5% down)
Mortgage Insurance Required for the life of the loan (both upfront and monthly)
Loan Term Options 15- or 30-year fixed (most common)
Occupancy Requirement Must be owner-occupied (no investment or vacation homes)
Who Can Qualify First-time buyers, repeat buyers, past bankruptcy or foreclosure survivors
Property Requirements Must meet FHA appraisal standards and be livable
π― Who Is an FHA Loan Good For?
First-time homebuyers β
Buyers with lower credit scores β
Those with limited savings for a down payment β
Borrowers recovering from bankruptcy or foreclosure β
You do NOT have to be a first-time homebuyer to use an FHA loanβbut many first-time buyers choose it because it's more flexible than conventional financing.
π Example Scenario (Kentucky)
If you're buying a home in Kentucky, using an FHA loan with a $200,000 sales price and a 3.5% down payment, your upfront costs and monthly payment might look something like this (ballpark):
Down Payment: $7,000
Upfront Mortgage Insurance: ~$3,500 (can be rolled into the loan)
Monthly Payment (including taxes & insurance): $1,450β$1,6
