What is an FHA Mortgage?
An FHA mortgage is a residential home loan insured by the Federal Housing Administration, an agency within the U.S. Department of Housing and Urban Development. This government backing enables lenders to extend more accessible qualification terms, making FHA loans a well-suited option for borrowers with lower credit scores or limited funds available for a down payment. These loans are designated exclusively for primary residences, making them a preferred choice among first-time homebuyers.
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Down payments start at 3.5%
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More flexible than other loan programs, the FHA allows credit scores down to 500.
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Requires both an upfront mortgage insurance premium (UFMIP, typically 1.75% of the loan amount, which can be rolled into the loan) and an annual mortgage insurance premium (MIP), paid monthly. Unlike PMI on conventional loans, MIP often can't be cancelled unless you refinance, depending on your down payment and loan term.