FHA loans are popular among Arizona homeowners because they are insured by the Federal Housing Administration, which means the borrower doesn’t have to pay for private mortgage insurance.
Borrowers prefer FHA home loans because they are less expensive, and banks favor this mortgage option because there is less risk if the borrower defaults. FHA loans also offer more flexible terms for those who don’t have as much saved for a down payment or who don’t have phenomenal credit.
Here are a few things to know about FHA loans if you are shopping for a home loan:
- The required down payment can be as low as 3.5 percent
- You can get either a fixed-rate loan or an adjustable-rate mortgage
- Fixed-rate terms can be from 10 to 30 years
- FHA loans are typically capped, but some counties targeted for development qualify for a higher amount
- You must have a minimum credit rating of 580 to qualify