Mortgage & Home Loans

What is FHA Loan?

An FHA loan is a government-backed mortgage for borrowers with lower credit scores or smaller down payments. It's insured by the Federal Housing Administration and designed to make homeownership more accessible.

With a credit score of 580+, you can put down just 3.5%. Scores between 500 and 579 qualify with 10% down. Loan limits vary by region—the 2026 floor for low-cost areas is $541,287.

The catch: FHA loans require two mortgage insurance premiums—an upfront fee (UFMIP) and an annual premium (MIP). If your down payment is under 10%, MIP lasts the entire loan unless you refinance.

Quick Facts

Insurance ProviderFederal Housing Administration (HUD)

Low-Cost Baseline Limit (2026)$541,287 nationwide floor

Minimum Down Payment3.5% (with credit score 580+)

Mortgage InsuranceUFMIP plus annual MIP required

PRACTICAL EXAMPLE

You have a 600 credit score and buy a $250,000 home with 3.5% down ($8,750). Your loan is $241,250. There's a 1.75% upfront mortgage insurance premium ($4,221.88) added to the principal, plus monthly MIP payments on top of that.

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RELATED TERMS

Learn More Key Concepts

MortgageA loan secured by real estate that you pay back in regular installments over a set term.

Down PaymentThe cash you pay upfront when buying a home, which becomes your initial equity in the property.

Conventional LoanA mortgage loan that is not backed or insured by a government agency, typically conforming to Fannie Mae or Freddie Mac standards.

PMIInsurance required on conventional loans when the down payment is less than 20%, protecting the lender against borrower default.

Closing CostsThe fees and expenses paid at the end of a real estate transaction to finalize the mortgage and transfer property ownership.

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