The FHA (Federal Housing Administration) does not make loans or guarantee loans. The FHA insures loans. The insurance removes or minimizes the default risk lenders face when buyers put down less than 20 percent. Without further approval from the FHA, its approved lenders are authorized to:

• Take loan applications
• Process loan applications
• Underwrite and close the loans

If your credit is less than perfect, FHA might be the loan for you. You may qualify for an FHA loan even though you have had financial problems.

• Credit scores can be lower than those for a conventional loan.
• Bankruptcy. You can obtain an FHA loan two to three years from the date of your bankruptcy discharge, as long as you’ve maintained good credit since your debts were discharged.
• Foreclosure. If you keep your credit in excellent shape since a foreclosure, an FHA loan will be available to you two to three years from the final date of your foreclosure.