FHA loans are mortgages issued by approved lenders and insured by the Federal Housing Authority. FHA home loan terms differ depending on the program. The terms available through FHA loan programs can be attractive to borrowers who can't afford large down payments or even qualify for conventional mortgages. These loans are designed to help low to moderate income borrowers and those with lower credit score.

Below are the requirements to apply for FHA loan:

• Credit score: 500 or above
• Down payment: 3.5% of the purchase price
• Residence type: Must be your primary residence
• Appraisal: Needs to be appraised by an FHA-approved appraiser
• Inspection: Has to be inspected to ensure it meets minimum eligibility standards
• LTV ratio: Max of 96.5% if your credit score is 580 or more; 90% if your score is under 580

The following documentations will be required to apply:

1. A credit report
   Employment history for two years
2. Income verification with recent pay stubs, bank statements and/or three years of tax returns
3. Proof that you are using the loan for a primary residence
4. An FHA-approved appraisal

An FHA loan is ideal for:

• First-time homebuyers who can’t afford a large down payment
• People who are rebuilding their credit
• Seniors who need to convert equity in their homes to cash