FHA loan
A government-backed loan insured by the Federal Housing Administration. Allows lower down payments and lower credit scores than conventional. Carries mortgage insurance for most of the life of the loan.
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Free to set up. No credit card.Part 1 of 4
Why a seller cares
An FHA buyer brings a small down payment and an appraisal with property standards attached. Peeling paint, a missing handrail or a bad roof can become a condition of the loan, and the seller often ends up fixing it.
Part 2 of 4
A simple example
An FHA buyer at $300,000 with 3.5% down. The appraiser notes peeling exterior paint on the 1970 garage and flags it.
| What the appraiser finds | What follows |
|---|---|
| Peeling paint on a pre-1978 home | Scraped and painted before closing, usually by the seller |
| Value at or above the price, no conditions | The loan proceeds like any other |
| Value under the price | The FHA appraisal sticks with the home for months, for any FHA buyer |
FHA financing opens the door to more buyers and brings a short list of conditions with it.
Part 3 of 4
What people get wrong
That FHA buyers are weak buyers. They are approved buyers with a specific program, and their loans close every day.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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