 TITLE: Is an FHA Loan Right for You? CONTENT: When Is an FHA Loan a Good Idea?\n--------------------------------\nFHA loans make sense if you don't have much saved for a down payment, or if your credit score isn't in good enough shape to qualify you for a conventional loan. It could also be the right choice if you're worried your interest rate will be too high with a conventional loan, or if you'd like to finance some of your closing fees.\nHere's why an FHA loan may be attractive if you meet any of these criteria:\n*   **Low down payment requirements.** If your FICO® Score☉ is 580 or higher, you can get an FHA mortgage with a down payment of just 3.5%. While some conventional loans now permit down payments as low as 3%, they're not easy to obtain if your credit isn't in great shape.\n*   **Low minimum credit score requirement.** The FHA threshold for a 3.5% down payment, a FICO® Score of 580, is at the low end of the range for subprime borrowers. But if you can make a down payment of 10%, you can qualify for an FHA loan with a FICO® Score as low as 500.\n*   **Favorable interest terms.** The annual percentage rate (APR) on an FHA loan is typically 1.5 to 2 points higher than those for conventional fixed-rate mortgages available to borrowers with good to excellent credit. But FHA rates are usually lower than introductory rates on subprime mortgages. Plus, FHA loans have fixed interest rates, while most subprime loans have adjustable rates that can increase significantly after an introductory period of three to five years.\n*   **Option to finance closing fees.** Lenders charge numerous fees for processing your mortgage, and with traditional mortgages, they must be paid in full when you close on the home. These fees add up to thousands of dollars, and not everyone can afford to pay them out of pocket. The FHA allows some of these fees to be rolled into the loan financing, so you can pay them off over time instead of having to come up with a large chunk of change at closing. Keep in mind that closing fees vary from lender to lender, and they also roughly correspond to your credit scores, with lower scores requiring a higher amount of closing costs. END