If you’re ready to buy your first home, but your savings account is lagging behind your eager intentions, an FHA loan may be your solution. A Federal Housing Administration (FHA) loan is one of the most affordable loan options out there and could even include down payment assistance for first-time, low-to-moderate-income homebuyers.

What are FHA loans?

loans have been around since 1934. They’re a tried-and-true tool used by countless Americans to get on the path to homeownership.

An FHA loan is issued by a bank or approved lender, but it’s insured by the federal government. Because of that, an FHA loan requires a lower minimum down payment, and an applicant can be approved with a lower credit score than what is typical with a conventional loan.

How do I qualify for an FHA loan?

Let’s start with what you’ll need to qualify for an FHA loan from an FHA lender:

• Minimum 3.5% down payment if your credit score is 580 or higher
• Debt-to-income (DTI) ratio of 50% or less (DTI compares monthly debt payments to monthly income, which indicates the monthly amount a borrower can afford to pay.)
• Steady income and a two-year history of employment
• The home being purchased will be the buyer’s primary residence
• No foreclosures in the past three years

FHA loan requirements

Work with your loan officer to calculate those costs. There may also be some limitations on the type of property you can purchase. A move-in-ready home is generally fine, but a “fixer-upper” or condo may offer some challenges.

FHA loans are not one-size-fits-all. Programs and guidelines vary from state to state, specifically for down payment assistance programs. Most have an income limit per household with credit scores of 650 and higher. When these guidelines are met, a buyer may be eligible for assistance of 3-6%, requiring little to no cash at close from the borrower. Many programs are even accessible to non-first-time home buyers.

What are my options?

Work with a Union Savings Bank loan professional who can assist you in finding the best options available for you and your future. Buying a first home is one of the most important decisions you will make. We’re honored to help you navigate the process to achieve your homeownership goal.