FHA or Federal Housing Associated Mortgage are guaranteed by the US Government, similar to VA or Veteran Administration and RD or Rural Development loans. The FHA mortgage typically has a 3.5% down payment requirement and allow for borrowers with not so perfect credit or lower income. A FHA Mortgage also allow for lenders & community members to have down payment assistance programs available. In the case of Idaho, Idaho Housing and Finance offers FHA down payment assistance and closing cost assistance for first time home buyers and sometimes for 2nd time home buyers.
FHA does require 2 fees, or Mortgage Insurance. The 1st Fee is an upfront mortgage insurance, which is a percentage of the loan amount, that is added to the loan amount. The second FHA mortgage insurance fee is a monthly mortgage insurance. This is part of a borrower's escrow account, and each month a certain amount is collected in the mortgage payment. Both of these fees are then sent to FHA, and it pays out forclosures in case that happens. Even if you put more than 20% down, on a FHA mortgage, you will still have to have FHA Mortgage Insurance.
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