The Federal Housing Administration (FHA) – which is a part of HUD – insurance the loan so your lender can offer you a better deal. Low down payments, low closing costs, and allowing the seller to pay the closing costs up to 6% of the sales price if that is negotiated into the sales contract. Also, with an FHA
loan you can have higher debt-to-income ratios than with a conventional loan. An FHA Mortgage allows for lower credit scores and may be easier to qualify for. The minimum down payment is 3.5% of the sales price. You will always have to pay mortgage insurance on an FHA loan if you put the 3.5% minimum down payment.
If you have ever had a bankruptcy you can qualify for an FHA loan with re-established credit and 24 months have passed from the bk discharge date.