Definition

• Insured by the Federal Housing Administration.
• Protects lenders against borrower default.
• Suitable for buyers with lower credit scores and limited down payment capacity.
• Mortgage insurance is required.

Ideal Borrowers

• Those with lower credit scores (as low as 500) and limited down payment capability.

Down Payment

• As low as 3.5%, but mortgage insurance is required.

Benefits

• Easier qualification, lower down payment, and flexible requirements.

Usage Limit

• Restricted to primary residences.

Strengths

• Broad accessibility for buyers with lower credit.

Considerations

• Mandatory mortgage insurance increases cost;
• property type restrictions.