Many miss out on the opportunity of buying their dream homes because they do not qualify for conventional mortgages. If you are one of them, there is no need to fret because you can avail of FHA loans. 

With FHA loans, homeownership is possible for more people. When you take the help of an FHA Loan, you need not save up to 20% of the cost of the house because you can pay as low as 3.5% for a down payment with FHA home loans.

The FHA loan has an excellent reputation for being a safe loan for prospective borrowers because the payout for the loan is done at a low-interest rate. Buyers who avail of the loan can enjoy a low mortgage rate even with a lower credit score. You can learn more about this type of loan in this article.

What Is an FHA Loan?

With FHA loans, homeownership is possible for more people because it is backed by the Federal Housing Administration (FHA), a branch of the US Department of Housing and Urban Development (HUD). Unlike their conventional counterparts, FHA loans do not require applicants to have excellent credit scores or large down payments.

If you avail of one, you can utilize the proceeds to purchase single-family homes. You can also use the money to buy a condominium unit or a manufactured home. FHA loans are excellent for buyers who have poor credit scores. What is even better is that this loan requires low down payments.  

Just a quick clarification, you should understand that the FHA does not give out loans. You still have to apply for an FHA loan from a qualified lender.

Has the Pandemic Affected FHA Loans?

When the real estate market suffered a downturn in 2008, many lenders were not as lenient as they used to be with their requirements for conventional mortgages. Since then, FHA loans have become an essential lifeline for first-time homebuyers.

The US housing market was severely affected by the 2008 recession. Most people believe the FHA loan was a good thing for the country because it helped many buyers who were previously locked out of the housing market due to their low credit scores.

With the historic turnouts at the start of the pandemic, lending institutions became more risk-averse due to high unemployment rates. The housing market was in a downward spiral, and home values dropped rapidly. Some homeowners were foreclosed on and lost their homes.  

Some lenders lost their shirts as well. Since then, lending institutions tightened their requirements for conventional mortgages and began to decline more loan applications.

The circumstances made FHA loans more competitive than usual. You might get a higher interest rate if you were eligible for one before the pandemic. Or worse, your application might be rejected. With that said, you might want to shop around before committing to something.   


FHA loans are outstanding because they help increase the chances of home ownership. If you want to buy a house, but your credit score or down payment prevents you from getting a conventional mortgage, you should consider an FHA loan. You might want to start with a traditional loan but take a backup plan. That way, you do not get locked out of the opportunity of owning a home.

If you are looking for a reputable institution that offers FHA loans in Utah, you can ask Clayson Mortgage to help you find one. We can help you find the right one for your needs, so contact us now for more information!