FHA mortgages an intriguing option in current market

Borrowers who are looking for an affordable mortgage option can get help from the federal government.

The Federal Housing Administration insures a number of home loans that are typically more affordable and accessible to borrowers with lower credit or income, reported financial website Bankrate.com. FHA loans look beyond pure credit score and take a harder look at a person’s financial situation to determine if they are reliable enough to pay off a loan. That can sometimes leave applicants with less-than-perfect credit scores eligible for a home loan that they might not normally qualify for under a non-insured lender, said the report.

Additionally, FHA loans require a 3.5 percent down payment, substantially smaller than typical home loans. Buyers can also get financial help from sellers or builders, who can sometimes cover the cost of closing on a new mortgage. And FHA-insured loans offer services like mandatory mortgage insurance and 203(k) plans which can help finance the cost of home repairs, said the report.

Many homeowners with an FHA-insured loan can also find themselves eligible for government modification programs should they find it difficult to make monthly payments.