If you have the desire of owning your own house , then the Federal Housing Administration (FHA) can help you do so. This is an association which helps you buy your home for a small down payment which needs to be paid and then you can avail mortgages, hence be able to pay for your own home. FHA would guide you on what needs to be done so that you could qualify for a loan, however, this does not mean that every individual could take such a loan.

Now if you’re wondering what a FHA loan is, it is a loan which the FHA approves against you defaulting in the future. This means that if in the future at any time you are not able to pay back your remaining balance then the FHA will pay. Due to this reason, people are willing to take large amount of mortgage loans. After this a common question arises as to which individuals can get such a loan? Well, anybody is liable to apply for a FHA loan. There are various programs available for different kinds of needs starting from small amounts to large amounts of loan which would be decided after reviewing your case. Another thing required would of you would be a decent credit score. The score does not have to be an outstanding one but it should be decent. Furthermore, you also need to have a reasonable debt to income ratio.

What makes FHA loans so popular is that you can avail this loan at just 3% down payment which no other associations or banks offer you. It’s true that if you default then FHA will on your behalf to the lender. This works in such a manner that when you apply for a FHA loan they will charge you a certain fee and you would have to pay upfront mortgage insurance premium of 2.25%. Therefore, when you default, then this premium money is used to pay off your debt.

The only downside of FHA loans is that it reviews your case and then only tells you how much you could borrow. On most occassions, it does not offer high amounts. Further the mortgage insurance premium which you pay to them would also be higher than those of the private mortgage insurances such as by banks. If you have a good credit score, then you might want a standard loan instead of a FHA loan because that might also allow you to make a small down payment looking at your credit score and credit history. Therefore, before applying for a FHA loan, always put all the offers on table and then evaluate which suits your needs the best.