Any way you slice it, an FHA loan is easy as pie.

Because they’re backed by the government, FHA loans are one of the easiest types to qualify for. Embrace accepts FICO(R) Scores as low as 580 for certain purchase loans, and offers down payment options as low as 3.5%. Plus, your entire down payment, including closing costs, can be covered with gift funds. Also, your debt-to-income ratio doesn’t have to be as low as with a Conventional mortgage, and reserve funds aren’t generally required. FHA loans are ideal for first-time homebuyers or borrowers who have challenging credit.
These loans are also a great option if you’re purchasing an older home or a fixer-upper. Through the FHA 203(k) program, you can finance the cost of the upgrades through your mortgage, instead of having to pay for repairs in cash or through more expensive options like a credit card or personal loan.
Refinancing with an FHA loan is also possible. If your credit isn’t in the best shape, but you want to save a little money, the FHA Streamline Refinance program might be the way to go. If you’ve kept up with your monthly payments for at least a year, you can apply for one without having your income, employment, or credit verified.
FHA and Conventional loans are the most common mortgages in the country. Both offer benefits, but there are many differences between them and, depending on your situation, one may be preferable over the other. Understanding the requirements for each can help you figure out which loan is right for you.
FHA
An FHA loan is administered by the Federal Housing Administration (FHA) and is easier to qualify for than a Conventional loan. With the FHA guaranteeing the loan, lenders are more willing to approve applications, but FHA loans are usually more costly.
- Down payments as low as 3.5%
- Single-family homes, condos, multi-unit properties, and manufactured homes
- Mortgage insurance is required
- Entire down payment and closing costs can sometimes be covered with gift funds
- Extra funding available for renovations and repairs with FHA 203(k) program
- FICO(R) Scores as low as 580 may qualify
Conventional
Conventional loans conform to Fannie Mae/Freddie Mac guidelines and are a financial agreement between the lender and the borrower. Conventional loans are not government-backed so they may be harder to qualify for than FHA loans, but they typically have lower costs.
- May offer lower interest rates
- No private mortgage insurance (PMI) with 20% down payment. Shorter-term PMI with less than 20% down.
- More expensive home purchases possible
- Available as fixed-rate and adjustable-rate mortgages
- Require minimum credit score of 620
- Often require 20% down payment. Some gift funds allowed.
- May require less documentation and therefore take less time to process
Frequently asked questions
What does it mean to be pre-approved?
What is the difference between Embrace, my local bank, and a broker?
What is an FHA insured loan?
How is my credit score calculated?
What is a home appraisal?



30-Year Fixed-Rate Refinance Mortgage Example:
The payment on a $225,000 30-year fixed-rate cash out refinance loan at 3.250% with a 70% loan-to-value (LTV) is $979.21 with 2 points due at closing. The Annual Percentage Rate (APR) is 3.520%. This assumes a FICO score of at least 690. Payment does not include taxes and insurance premiums, which will result in a higher monthly payment. Interest rates and annual percentage rates (APRs) are based on current market rates and are subject to change without notice. Rates offered may be subject to pricing add-ons related to property type, loan amount, LTV, credit score, and other variables. Mortgage insurance may be required for LTV >80%. If mortgage insurance is required, the mortgage insurance may increase the APR and the monthly payment. Stated rate may change or not be available at the time of loan commitment or lock-in.
30-Year Fixed-Rate Purchase Mortgage Example:
The payment on a $225,000 30-year fixed-rate purchase loan at 3.125% with a 70% loan-to-value (LTV) is $963.84 with 2 points due at closing. The Annual Percentage Rate (APR) is 3.390%. This assumes a FICO score of at least 710. Payment does not include taxes and insurance premiums, which will result in a higher monthly payment. Interest rates and annual percentage rates (APRs) are based on current market rates and are subject to change without notice. Rates offered may be subject to pricing add-ons related to property type, loan amount, LTV, credit score, and other variables. Mortgage insurance may be required for LTV >80%. If mortgage insurance is required, the mortgage insurance may increase the APR and the monthly payment. Stated rate may change or not be available at the time of loan commitment or lock-in.