Arranging an affordable mortgage is one of the most important steps in buying a home. Unfortunately for many people, a low-rate home loan usually relies on having a good credit rating as well as making a large down payment. Both of these requirements mean it can be difficult to get the right deal.

But if a mainstream mortgage is out of your financial reach, an FHA loan could provide a way forward. These home loans are guaranteed by the Federal Housing Association with the aim of making homeownership easier, and they’re issued only through a panel of approved lenders. What are the particular benefits that FHA loans offer?


A couple smiles at their small dog, who they are carrying in a moving box as they move into their new home.

  1. 1. Lenient Qualification Criteria

    Compared to most traditional mortgages, FHA loans are relatively simple to qualify for. You don’t need to have a huge income, and you don’t need a spotless credit history.

    The most important factors in getting your application approved are a steady employment history and a reliable wage. If you’ve struggled to be approved by other lenders because of your financial situation, an FHA loan could provide an alternative solution.

  2. 2. Low Down Payments

    While most other mortgages require a down payment of at least 10%, and the best deals ask you for 20% or more, an FHA loan can be taken out with a very low down payment. Typically, putting down 3.5% of the home’s value will be enough to have your application considered.

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  3. 3. Finance Your Closing Costs

    FHA loans allow the costs of closing to be added to your advance, so you need even less cash saved up in advance to buy a home. Considering that closing costs can easily amount to several thousand dollars, this is a valuable feature for people without savings to fall back on.

  4. 4. Easier Mortgage Insurance

    One of the most significant benefits of an FHA loan is that your mortgage insurance can be paid upfront, with the premium added to your loan amount. Alternatively, you can choose a monthly premium that’s added to your repayments. In both cases, it’s much easier and cheaper to take out essential mortgage insurance via an FHA loan than with a private insurer.

  5. 5. Easier to Buy a Fixer-Upper

    Lastly, the FHA has an option that lets you buy a run-down home and add the renovation costs to your loan. By buying a home in a relatively poor but fixable condition, you can become a homeowner for much less outlay.

    However, the criteria for these fixer-upper loans are fairly strict. The building must pass an FHA appraisal, and the renovation costs must be fully accounted for and approved. Nonetheless, the FHA makes this option much easier than most mainstream mortgage lenders.


If you’ve been trying to get a mortgage through your bank but your application’s been refused, you don’t need to give up on the dream of homeownership. An FHA home loan could provide a solution when it seems that all your other options have failed.