The Federal Housing Administration (FHA) loan allows buyers to put down just 3.5% of the purchase price of a primary residence, but requires a credit score of 580 or higher and a debt-to-income ratio below 43%. If you have a credit score between 500 and 579, you have to put down 10%.
FHA loans do require private mortgage insurance – made as one upfront payment plus monthly payments — and will also usually come with a higher interest rate than a conventional mortgage would. The buyer is also responsible for closing costs, however that’s always negotiable when placing an offer on a home with the seller.
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