While not solely intended for first-time homebuyers, FHA home loans are popular with them anyway. Why? Perhaps it’s because of the program’s relaxed credit and down payment requirements. Whatever the reason, FHA home loans are ideal for helping credit- and down payment-challenged borrowers get into a home.

For qualified borrowers, FHA home loans require a 3.5% down payment. Borrowers must have a credit score of at least 580 to qualify for this feature, while borrowers with a 500 to 579 score need to put at least 10% down.

No matter the amount of a borrower’s down payment, FHA home loans come with mandatory FHA mortgage insurance. Unlike their conventional counterparts, an FHA home loan’s mortgage insurance is not avoidable, unless the borrower refinances to a conventional loan.

In addition to lower down payment and credit score requirements, FHA home loans have a higher debt-to-income ratio threshold, topping out at 43%.

A unique feature of the FHA home loan program is its strict property standards. Among these is that the property purchased must be the primary residence for the borrower and the dwelling must meet the FHA’s building requirements, which focus on the safety, security, and soundness of the dwelling’s design and construction. Of particular interest to the FHA is a house’s roof, electrical system, water heater, and maintenance, among others. A workaround of these requirements is for the seller to repair any of these features that don’t meet the FHA’s standards.

FHA home loan applicants do not need to meet an income requirement, however, they must have at least two established credit accounts. Furthermore, they must also not be delinquent on federal debt, such as taxes.

Down payments on FHA mortgages can come from gift funds, but the donor must verify the funds as a gift in writing.

Buying a rental property with an FHA home loan is possible, but there are specific requirements to meet. For instance, real estate investors can finance a rental property that features up to four units, one of which the investor must occupy.

The FHA home loan program also offers refinance loans, which are available to FHA mortgage holders and those who don’t have an FHA mortgage. For those investing in fixer-upper properties, the FHA offers a 203(k) loan for making repairs to the property.

Another of the FHA’s mortgages is its One-Time Close Loan, which finances the construction of a house from the ground up.

In regard to its home loans, the FHA defines a first-time home buyer as a borrower who has not held principal ownership in a house for three years prior to the loan’s closing date.

It’s important to understand that in addition to the FHA’s requirements for its home loans, FHA-approved mortgage lenders may issue additional requirements.

So, if you’re looking to buy a home, the FHA home loan program is a good option, especially if you have credit or down payment challenges. Today is a good day to start preparing your finances for getting an FHA mortgage.