FHA loan
A mortgage insured by the Federal Housing Administration, allowing lower down payments and credit scores in exchange for upfront and annual mortgage insurance premiums (MIP).
What does fha loan mean?
Backed by the Federal Housing Administration, FHA loans open the door to buyers with smaller down payments (as low as 3.5%) and more forgiving credit than conventional financing asks. The trade-off is mortgage insurance: an upfront premium, usually financed into the loan, plus an annual premium that — on most FHA loans today — runs for the life of the loan rather than dropping off at 20% equity.
Frequently asked
What are the requirements for an FHA loan?
A credit score of 580 for the 3.5% minimum down payment (500 with 10% down), a debt-to-income ratio generally under about 43–50%, and the home as your primary residence. FHA is more forgiving on credit than a conventional loan.
How long do you pay FHA mortgage insurance?
On most FHA loans the annual premium lasts the life of the loan if you put down less than 10%; with 10% or more down it drops off after 11 years. Many borrowers refinance into a conventional loan to remove it.
FHA or conventional — which should I choose?
FHA if your credit is in the 580–669 range or your down payment is small; conventional if your credit is 620+ and you can reach 20% equity to cancel PMI, since FHA insurance usually cannot be cancelled.
Put it to use
All glossary terms FHA Loan Calculator
Estimate an FHA payment including upfront and annual mortgage insurance premiums (MIP).
Mortgage Calculator with PMI
Include private mortgage insurance in your payment and find out exactly when PMI drops off.
Down Payment Calculator
Turn a down-payment percentage into dollars and see whether you clear the 20% PMI threshold.