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What is an FHA loan? Essentially an FHA loan is a loan that is guaranteed by the Federal Housing Administration. Lenders typically do not want to lend on a home unless a buyer has a 20% down payment. Any loan with less of a down payment is viewed as risky. In the home buying context, risky means it has to be insured or guaranteed. So, if there is less than a 20% down payment, mortgage insurance is required. And, in today’s market unless you have a credit score of at least 720, you won’t be able to get mortgage insurance. And
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