FHA mortgages have several differences from conventional home loans, including down payment requirements. If you want a 3% down home loan then the Federal Housing Administration is a great place to start. When first time home buyers are considering buying a home, the FHA loan down-payment offers borrowers a solution for saving money, because the down-payment requirements are significantly less than conventional lending requirements. Most conventional lenders require 20-30% down-payments while FHA down-payments only require 3.5%. If a borrower has bad credit, FHA may request a 10% down-payment, whereas conventional lenders will simply decline the loan request completely. If you need a bad credit mortgage you will be pleased with FHA because the rates are much better than interest rates that are available with subprime loans.

FHA Simplifies the Process of Becoming a Homeowner with Low Down-Payment Home Loans

One key benefit to consider with FHA loans is that HUD has mandates the down-payments be made by the buyer. The seller is allowed to offer concessions such as paying closing costs or other expenses related to selling the home, but the seller is prohibited from adding funds to the down payment. Home buyers must come up with the money for the down-payment and other up-front lending costs don't count towards the down-payment. FHA recently amended their guidelines and they introduced credit score requirements that require a minimum fico score of 500.

Checklist for FHA Loans

• 2-year history of your residences
• Date of Birth and Social Security numbers for all applicants
• 2-year history of employment
• Copies of paystubs covering at least a month
• Approximate value of all personal property
• Certificate of Eligibility and DD-214 (for veterans only)
• Copies of W2's or 1099's for the last 2 years
• Complete personal tax returns for the last 2 years
• 12-month rental history from landlord (Only for first time homebuyers)