What Is an FHA Loan?

If you’re just getting into the home buying market and are working with a real estate broker in Alpine, TX, there are probably quite a few terms being thrown around that are new to you—especially when it comes to the banking aspect of things. Mortgage terms in particular can be hard, including abbreviated terms like FHA. In fact, this is one of the first things new homebuyers come into contact with.

FHA loans are Federal Housing Administration loans. Often utilized by first-time homebuyers, these loans are popular because they require a much smaller down payment upfront. For most general mortgage loans, lenders expect between 10 and 20% of a down payment. For FHA loans, that number can shrink down to as little as 3.5%. It’s a much more manageable number!

FHA loans come with some stipulations, however. A lower interest rate is accompanied by mortgage insurance premiums that need to be paid, just in case the applicant was to default on their loan.


Not just anyone can apply for an FHA loan. In fact, there’s a strict list of criteria that need to be followed by applicants:

  • Borrowers must have worked with the same employer for the last two years.
  • Borrowers must be able to prove citizenship and residence for the last two years.
  • Borrowers must pay a minimum 3.5% down payment on the total value of the home.
  • FHA loans can only be applied to primary occupancy residences.
  • Properties must be appraised from an FHA-accredited appraiser.
  • Annual payments of the FHA loan must not exceed 30% of the borrower’s income.
  • Total billing obligations must not exceed 43% of borrower’s income.
  • Borrowers must have a credit score of at least 580 to qualify.
  • Borrowers must be at least two years removed from any bankruptcies.
  • Borrowers must be at least three years removed from any previous foreclosures.

There’s a lot to be considered when applying for an FHA loan! Thankfully, these rules and regulations are geared towards approval for those who are responsible individuals, who may simply not have the means to outright afford a major down payment on a home. Again, this particularly applies to younger first-time homeowners who may not be as financially established.

Is FHA Right for You?

If you’re thinking about becoming a homeowner but just can’t put together the savings for a big upfront deposit on a house, it’s worth talking to a real estate broker in Alpine, TX. You might qualify for an FHA loan without even realizing it! Best of all, a real estate agent will be able to break this special type of loan down as it applies to your unique situation, giving you real-world facts and figures to work with.

Looking into FHA loans is a great way for younger, first-time homebuyers to get familiar with the buying process. And, obtaining and paying an FHA loan is a superb way to build your credit worthiness over time. Simply put, it’s a great way for new homeowners to grow into maturity, without being cash-strapped and set up for financial hardship along the way.