What type of mortgage allows for properties to be purchased with minimal down payments and lower credit scores?

A Federal Housing Administration (FHA) mortgage is designed specifically to help individuals who may have less-than-perfect credit and cannot afford a substantial down payment. One of the key benefits of an FHA mortgage is that it allows for down payments as low as 3.5% of the purchase price, making it accessible for first-time homebuyers and those with limited financial resources.

Additionally, the FHA has more lenient credit score requirements compared to conventional loans, which often require higher credit scores for approval. This makes FHA loans a popular choice among buyers who may struggle to qualify for more traditional forms of financing.

In contrast, conventional mortgages typically require larger down payments and higher credit scores, while VA mortgages, while offering favorable terms for veterans, still have specific eligibility requirements that may not apply to all borrowers. Bridge mortgages are a short-term financing option primarily used to fund the purchase of a new home before selling the existing one, and they do not inherently provide the same low down payment or credit score flexibility.