FHA Loans

An FHA loan is a government insured loan that’s popular with borrowers since the minimum down payment is often times lower than conventional loans and the qualification requirements are more flexible. The minimum down payment required by the government is 3.5%, and a family member can actually “gift” it to the borrower. FHA loans  with only 3.5% down can be done with a middle credit score as low as 580, with other compensating factors. You can either get a 15, 20, or 30 year fixed rate loan and the debt-to-income ratio can go up to 56.9% as long as federally required residual income tables are met. For those that qualify, you can also use the MCC tax credit with an FHA loan, which allows the homebuyer to claim up to $2,000 annually as a tax credit toward their federal income tax liability and qualify for about $20,000 more home.