 TITLE: Is an FHA Loan Worth It if You Have Good Credit? CONTENT: Other Loan Options to Consider\n------------------------------\nIf you have high credit scores but are having a hard time raising a down payment of 20% (or even 10%) of the purchase price, FHA loans are not your only option. Consider some of these alternatives:\n*   **Freddie Mac Home Possible loan****:** Freddie Mac, as the Federal Home Loan Mortgage Corporation is popularly known, devised the Home Possible loan to lower the barriers to homeownership. Down payments start at 3% and can come from family, employer assistance, a secondary loan or \"sweat equity.\" The minimum credit score requirement is 660 (680 if you're refinancing an existing loan), but if you or a co-applicant lack a credit score, you still could qualify through an alternative underwriting process.\n*   **Fannie Mae 97 LTV loan:** The Federal National Mortgage Association, better known as Fannie Mae, authorizes two categories of mortgage loans that require minimum down payments of 3% (or LTV ratios of 97%):\n    *   The Fannie Mae Home Ready 97 LTV loan is designed for low-income borrowers—specifically those with incomes below 80% of their local area median income as designated by the U.S. Census Bureau.\n    *   The Fannie Mae Standard 97 LTV loan is open to any borrower, provided at least one applicant is a first-time homebuyer and all applicants have credit scores. (An automated underwriting process that uses credit scores is required for loan approval.)If all applicants for Fannie Mae LTV loans are first-time homebuyers, at least one must complete a homeowner education program.\n*   **VA loan****:** Backed by the U.S. Department of Veterans Affairs, VA loans are designed for qualifying veterans, servicemembers, their spouses and other beneficiaries. They are available with no down payment and do not require mortgage insurance. A funding fee of 2.3% of the loan amount is required if you put less than 5% down—down payments can be as low as 0%. If you make a down payment of 10% or greater, the fee drops to 1.4% of the loan amount.\n*   **USDA loan****:** Guaranteed by the U.S. Department of Agriculture, USDA loans can help low- to moderate-income homebuyers who want to purchase a home in eligible rural areas. They don't require down payments, and offer flexible credit score requirements. (A minimum FICO® Score of 640 is required for rapid approval using the USDA's automated application process, but you can be approved with a lower credit score via the process of manual underwriting.)\nGet Your Credit Ready for a Mortgage Application\n------------------------------------------------\nTo optimize your credit profile for mortgage approval, check your free credit report and get your credit score for free through Experian to know where you stand. Make sure to pay your bills on time, avoid taking on major new debt, and pay down your credit card debt as much as possible before applying for a mortgage. END