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The FHA loan is a popular option for borrowers because it allows them to buy a home with a relatively small down payment. It is also one of the most misunderstood loan products in the market. In this article we get to the bottom of how FHA mortgages work, and bust some of the common misconceptions about this flexible loan product.
- Federal Housing Administration, Top Ten Facts about FHA Loans
- FACT 1: The FHA is NOT a mortgage lender
- FACT 2: FHA loans are NOT just for first time buyers
- FACT 3: FHA loans typically require just a 3.5 percent down payment
- FACT 4: The cash down payment can come from any source
- FACT 5: Lenders can approve FHA borrowers with poor credit scores
- FACT 6: Some lenders set stricter standards
- FACT 7: FHA loans may be more expensive, or less expensive, than other types of mortgage
- FACT 8: Homeowners “armed with knowledge” get a MIP reduction
- FACT 9: There are limits on how much you can borrow
- FACT 10: FHA loans are assumable
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