In order to assist home-buyers, the Federal Housing Administration (FHA) offers mortgage loans that require lower down payments than traditional Conventional loans.
The biggest advantage of an FHA loan is the lesser down payment required. For an FHA loan, a minimum down payment of 3.5% of the loan amount is required. This could be significantly lower than a Conventional loan.
The biggest disadvantage of FHA financing is the mortgage insurance premium (MIP). For most FHA loans, there is an upfront payment of 1.75% of the loan amount payable at closing, plus an annual mortgage insurance premium that is paid along with your monthly mortgage. You can visit FHA.gov for up-to-date fee information.
For more information on FHA Loans:
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