Down Payments and Other Fees

• FHA mortgage loans are useful because of their low out-of-pocket expense. Buying a home is costly. Mortgage lenders require down payments, which are typically 20 percent of the sale price. But if qualifying for an FHA loan, you can get a home with a down payment between 3.5 percent and 5 percent of the sale price. Closing costs, which are funds paid to broker and lenders, are another expensive costs with buying a home, but FHA borrowers can roll most of their closing costs into the loan balance.
  
  

Credit Scores

• According to the Home Loan Learning Center, the standard minimum credit score for a mortgage loan is 680. But with FHA mortgages, borrowers can acquire financing with a much lower credit score -- minimum 620 credit score or no credit score. This type of mortgage helps borrowers who are rebuilding their credit history and want the opportunity to own property.
  
  

Past Credit Mistakes

• Past credit mistakes will not prevent FHA mortgage approval. Qualifying for an FHA home loan with a past bankruptcy or foreclosure on your record will require allowing sufficient time to pass. This gives you time to reverse bad credit and prove that you're responsible enough to manage a home loan payment. If you filed bankruptcy in the past, you must wait two years to apply for an FHA mortgage; and if you lost an prior residence to foreclosure, you must wait three years to apply for an FHA mortgage loan. FHA requires perfect credit since a bankruptcy or foreclosure.
  
  

Housing Affordability

• Another perk of FHA mortgage loans is the ability to spend a larger percentage of your income on the housing payment. With conventional mortgages, lenders have a standard rule of keeping mortgage payments below 28 percent of your gross monthly income. If qualified for an FHA mortgage loan, you can spend up to 30 percent of your monthly income on the loan payment. This extra allowance can increase purchasing power.
  
  

FHA Limits

• The Federal Housing Administration does impose limits on how much a borrower can spend on a specific property. These lending limits vary for each state; and borrowers can learn about their individual state's limit by speaking with an FHA mortgage lender or by visiting the FHA's official website (see resources). There are no income limits with FHA mortgage loans.