The FHA loan program is a powerful lending tool. Last year, more than 1.3 million Americans relied on the federal program for support in buying a home.

While these programs are powered by the Federal Housing Agency, “FHA loans” are actually administered by approved lenders. The role of the government is to insure the loans.

This relationship means that the loans carry less risk, and are therefore more accessible to people wanting to buy a home.

So what are the benefits of an FHA loan? Read on to learn exactly how they help hundreds of thousands of people fulfill their dreams of buying a home each year.

Large down payment unnecessary
One of the biggest hurdles in the home-buying marathon is saving up enough money for a down payment and the associated costs of a home purchase. It adds up quickly.

Thanks to government backing, an FHA loan tosses the typical down payment benchmark out the window to lessen the financial burden.

Under an FHA plan, homebuyers can expect to pay just 3.5% for a down payment.

An FHA loan is a great path for borrowers who remain a little short on cash for a large down payment and closing costs.

Gift funding permissible
Conventional lending comes with strict provisions on funding sources.

An FHA loan, however, is more lenient and permits applicants to use money that was gifted to them toward the home purchase. This means that borrowers can receive money from family, future family, employer, charity or friends toward the home purchase.

This can relieve some of the pressures on the buyer to immediately come up with the full down payment on their own.

Lenient borrowing terms
A smaller down payment requirement is a huge relief to many buyers. But that’s not all.

FHA loans are designed to encourage homeownership and are more accessible to more consumers.

As such, applicants will have some extra leeway on the credit score requirement. The FHA will also invite borrowers with a nontraditional credit history to apply for a loan.

Applicants should keep in mind that an FHA loan, much like other types of loans, will have some strict guidelines to follow. But buyers should also have peace of mind that an FHA loan program can help them in ways other traditional lending programs simply cannot.

Premier Mortgage Resources, LLC is not affiliated with or an agency of the federal government.