- Unlike most conventional loans, FHA doesn’t require a large down payment. You can put down as little as 3.5 percent of the purchase price of the property.
- FHA loans are a good option for young, first-time home buyers who have not had as much time to save for a large down payment or establish a high credit score.
- Even if you’ve suffered from bankruptcy or foreclosures that have hindered your ability to qualify for traditional loans, you may still qualify for a mortgage through the FHA.
- Paying the FHA funding fee, which includes a monthly insurance premium as well as an upfront premium, adds on to the cost of the mortgage.
- You may end up with higher interest rates to compensate for the small down payment than you would with a conventional loan.
- Whereas conventional loans allow you to cancel your insurance policy once you’ve accrued enough equity on the home, FHA loans require that you continue paying monthly mortgage insurance premiums.