In a nutshell:
A good option for those with high debt-to-income (DTI) ratios, which is the percentage of your monthly income that goes to paying your mortgage, loans, credit cards, & child support. 45% is generally the max DTI ratio, but FHA loans allow you to spend up to 57%.
- FHA loans can be obtained by buyers with credit scores as low as 580
- They require only a 3.5% down payment instead of the conventional 5%.
- FHA loans are insured by the government, so the premiums are higher than private mortgage insurers.