The FHA Home Loan is an Affordable Loan Facility for Low Income Earners

Key to the New HouseThe single biggest purchase of any person or family is usually their home. This is a long-term investment where the homeowner pays the mortgage monthly for up to 30 years. The home is not just big, but in monetary terms as well.

According to experts at PRMI St. George, one of the easiest loans to apply for is the FHA Home Loan. This facility provides a simple and affordable mortgage with flexible terms. This is usually recommended for those with a low credit score, and the conditions of the loan reflect that.


The FHA Home Loan is meant to be an easy way for people to buy their first home. The borrower can avail of the loan if he has a credit score of 500 or higher. Downpayment is 3.5% for those with a credit score of 580 and above, while those who have credit scores between 500 and 579 require a downpayment of 10%.

Loan term is either 15 or 30 years. The mortgage insurance has an upfront premium of 1.75% of the loan amount and an annual premium between 0.45% and 1.05% of the loan amount. The annual premium is paid in monthly installments as part of the mortgage payment. The loan has a fixed interest rate.


The FHA Home Loan is not funded by the FHA. Instead, it is lent by a lending institution and insured with the FHA. Part of the mortgage payments is loan insurance premiums. If the borrower defaults on the loan, the FHA will cover the payments.

The terms of the loan allow lower to moderate income earners, and those with a low credit score to be able to buy a principal residence. Repeat buyers can avail of FHA loans, as long as these are used to buy a principal residence.

The FHA Home Loan was first established during the Great Depression in the 1930s, to help low-income earners buy their own home. The terms of the loan make it very accessible for low to moderate income earners to avail.