When looking to buy a house, the most challenging part is paying the price tag. For most people, a house is the biggest purchase that they make throughout life. But you don’t have to pay that price tag without help. When buying a house, there are multiple loan options available to you. Today, we will be discussing the ins and out of a Federal Housing Loan.


According to Zillow.com, a federal housing loan is a mortgage that is funded by the Federal Housing Administration (FHA). Typically these loans are the most popular with first home buyers. This loan attracts so many first time home buyers because you do not need a high credit score to obtain one.

An FHA loan allows borrowers the ability to pay down payments of 3.5% if the credit score of 580 or higher. Even those will a lower credit score, between 500 to 579, can still get this type of loan, as long as a 10% down payment is made.


A reasonable credit score and a down payment are not the only two requirements you need for a Federal Housing loan. While a Federal Housing loan has more flexibility compared to other  According to Federal Loan Home Center, to qualify you must have the following:

  • You must prove to have two years of steady employment history.
  • Your mortgage payments must be less than 31% of your gross monthly income.
  • You have to be at least two years out of bankruptcy and three years out of foreclosure.
  • Your total debt cannot exceed 43% of your income.
  • These loans are for primary residence occupancy only; you have to plan on living in the home that you apply the loan to.

The Next Steps

If you meet all the requirements for this loan, there are few steps you need to take before you can sign the closing papers.

The first thing you will want to do is meet with an FHA-approved mortgage broker that is local to you. There are only certain federally approved brokers can offer these loans. To find an FHA lender near you, utilize the FHA Lender Finder from the website of the United States Department of Housing and Urban Development.

After you find an FHA approved mortgage broker you will then want to save for your down payment. As mentioned before,  you will have to pay at least 3.5% of the purchase price.

Once you have saved, it is time to gather all of your necessary documents. These documents include; tax records, credit statements, and personal information including previous addresses (in the last two years) and employment history.

When you make it this far, you can complete a loan application and then have the property appraised by your FHA-approved broker. Having your broker assess your property helps to ensure that the property is up to date with all regulations and it is the right value for the location of the area.

Finally, you are ready to sign the closing papers and become an official homeowner.