In many ways, an FHA loan – which is insured by the Federal Housing Administration – is “easier” than a conventional loan. The requirements are less strict and there are fewer out-of-pocket expenses, but FHA loans allow for increased loan limits. In addition, borrowers are permitted to accept monetary gifts from family members to help cover costs. All of these benefits make FHA loans popular with first-time homebuyers.
This loan is also designed to assist borrowers who may have slight credit problems, as long as they are able to provide a minimum cash down payment of 3.5% of the contract sales price.