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What is an FHA Loan?

As we are all unique, it’s critical that when you begin your home buying journey you do thorough research on what loans you can apply for. A popular loan choice among first-time homebuyers is a Federal Housing Administration (FHA) Loan. Assisting people in purchasing their dream homes since 1934, FHA loans can be the perfect solution to moving you into your own. FHA mortgage requirements in Cary can be found below.


Backed by the Federal Housing Administration, FHA loans were formed to help potential homebuyers with low-to-moderate income achieve homeownership. A primary characteristic that makes FHA loans an attractive option is that they require lower minimum down payments and credit scores.

FHA loans allow borrowers to qualify for down payments with as little as 3.5% down if their credit score is 580 or higher. If you have a credit score lower than 580, FHA loans help solve that situation as well. For credit scores between 500-579, borrowers can still receive a loan but a down payment of at least 10% is required. While these benefits sound stellar, it’s important to know that as a borrower you also have to pay mortgage insurance premiums as this protects your lender if you default.


While low credit scores and down payments are very important benefits associated with FHA loans, there are several additional advantages to receiving an FHA loan. Those include:

  • The use of gift or grant funds for a down payment
  • Upfront mortgage insurance premium can be financed
  • Lower ongoing monthly mortgage insurance premiums (for those who qualify)
  • More flexible underwriting criteria compared to conventional loans
  • Mortgage can be taken over (or “assumed”) by qualified buyers when the home is sold


As you go through the home buying process, it’s not uncommon to frequently see FHA loans being compared to conventional loans. One of the major differences between the two is that while FHA loans are backed by the government, conventional loans are not. For more details, here’s a side by side comparison:

FHA LoansConventional LoansMinimum Credit Score500620Loan Terms15 or 30 years10, 15, 20, or 30 yearsDown Payment3.5% for credit scores of 580 + 10% for credit scores between 500-5793-20%Private Mortgage Insurance (PMI)Last the life of the loanDropped at 20% equityResident RestrictionsMust be the primary residentNo residence restrictionsDown Payment Gifts100% of the down payment can be a giftOnly part of the down payment can be a gift if the down payment is less than 20%


When it comes to qualifying for an FHA loan, credit score and down payment amounts are just the tip of the iceberg. There are several other  FHA requirements in Cary that go into applying for an FHA loan in Cary. To give you a general idea of what to expect, here are a few guidelines:

  • Proof of steady employment history is required or proof of working at the same employer for at least two years
  • You must have a valid Social Security number
  • You must obtain a property appraisal from an FHA-approved appraiser.

For more information about FHA loans in Cary visit here.

While there is no doubt that FHA loans in Cary can be a great borrowing option, it all depends on your unique home buying needs. If you’re someone who’s credit score or income aligns with what FHA loans in Cary have to offer, then this may be the best loan option for you. It’s important to work with your lender to find out the best financing solution that will help place you in your dream home.

With a specialized approach to self employed borrowers, first time homebuyers, jumbo loans, VA loans Raleigh and FHA Loans Raleigh, The Sherry Riano Team is knowledgeable and advocates for any customer they partner with! Click HERE to check out the mortgage requirements.

Reach out to The Sherry Riano Team with any questions. The best mortgage lenders in Cary.