 TITLE: How to Qualify for an FHA Loan CONTENT: How to Decide if an FHA Loan Is the Right Choice\n------------------------------------------------\nAn FHA loan does offer significant benefits, but it's not the right choice for every would-be homebuyer. An FHA loan could make sense for you if:\n*   **Your credit needs improvement.** Conventional mortgage loans usually require a credit score of at least 620, while FHA loans allow for lower credit scores. Even if you've had more significant credit problems, such as a bankruptcy, you could still qualify for an FHA loan.\n*   **You don't have much saved for a down payment.** Since FHA loans allow you to put down as little as 3.5%, they're an option for homebuyers who haven't been able to set aside a significant sum.\n*   **You need help with closing costs.** Conventional mortgages require borrowers to pay hefty upfront costs in addition to the down payment, which can easily total in the thousands. To help homebuyers, the FHA allows some closing costs to be rolled into the mortgage and paid over time.\nFHA loans have their advantages, but there's a trade-off in the form of the mortgage insurance. Homebuyers who take out an FHA loan must pay an upfront premium that's usually 1.75% of the base loan amount. There's also an ongoing annual mortgage insurance premium that usually costs 0.45% to 1.05% of the loan amount. This annual premium (paid in monthly installments) lasts for the life of the loan unless you refinance later on or put down 10% or more, in which case it falls off after 11 years.\nConventional loans also require mortgage insurance if your down payment is less than 20%, but the policy can be canceled once you reach 20% equity in your home. If a conventional loan is within your reach, it's worth comparing both the short-term and long-term costs since FHA mortgage insurance premiums can add up. END