FHA LoanThanks to the Department of Housing and Urban Development’s Federal Housing Administration (FHA), you can now obtain a home loan from a private lender much more easily. With the benefits that HUD FHA-backed loans offer, you should now consider making the transition from a tenant to a homeowner.

Why go HUD FHA instead of conventional?

The primary reason many home buyers in the country opt for loans backed by the FHA is because they can rest easy knowing that, in the event they default on their loan, the administration will take responsibility for repaying the lender. Bonneville Multifamily Capital points out because the government insures these loans, lenders are at less risk of losing money from defaulting borrowers.

The results? Lower loan interest rates as compared to conventional mortgages, which then give you a greater opportunity of home ownership.

The down payment advantage

Another advantage of securing an FHA-insured loan from the HUD is a smaller down payment requirement. Since you do not have to make the usual 20 percent down payment that most private lenders require, you will find it easier to buy a home and afford paying for your mortgage.

Satisfy the requirements set by the HUD for their FHA loans, and you would only need to come up with a minimal 3.5 percent down payment.

Less worries about closing costs

Most traditional lenders charge borrowers closing costs, further taking mortgage payments higher and making it even more difficult for home buyers to secure a loan. Although FHA loans still come with closing costs, they are far lower than traditional loans. Through an FHA-backed loan, your HUD multifamily lender may only charge you up to one percent of the amount you borrow.

You still need to meet certain requirements and qualifications when applying for an FHA loan, but these are far easier to satisfy and complete compared with conventional loans.