The guidelines of Federal Housing Administration or FHA 203B loan include at least 580 credit score and a down payment of 3.5 percent of the purchase value of the home, says the San Francisco Chronicle. Applicants must pay 10 percent of the purchase price if their credit scores range between 500 to 579.
The FHA loan guidelines are relatively relaxed, making the loan easier to get, according to the San Francisco Chronicle. Consequently, the loan acts as a suitable option for borrowers who fail to meet the loan requirements of conventional loans, which require at least 20 percent of the home's purchase price as a down payment. In fact, individuals with stable income and employment but minimum score requirements may be eligible for FHA loan despite low credit scores.
To apply for FHA loan, the borrower should first confirm his credit score from credit-reporting bureaus, such as Equifax, Experian and TransUnion, advises the San Francisco Chronicle. The borrower should also know the loan limit in his area to avoid applying for more loan that he should. The loan limit information can be obtained from the FHA lender's office. Additionally, the applicant must buy mortgage insurance, which caters for the loan in case he fails to pay.