An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). The loan program is designed for low-to-moderate income borrowers. FHA loans require a lower minimum down payments and lower credit scores than many conventional loans.
FHA loans have been helping people become homeowners since 1934. For borrowers interested in buying a home with an FHA loan with the low down payment amount of 3.5%, applicants must have a minimum FICO score of 580 to qualify. However, having a credit score that’s lower than 580 doesn’t necessarily exclude borrowers from FHA loan eligibility. A minimum of 10% down payment is required.