FHA Loan
A government-insured mortgage program designed to help buyers with lower credit scores or smaller down payments qualify.
FHA loans are insured by the Federal Housing Administration, a division of HUD. Because the federal insurance limits lender losses, FHA programs accept credit scores as low as 580 with 3.5% down, and sometimes as low as 500 with 10% down.
The trade-off is mortgage insurance. FHA borrowers pay an upfront premium (often financed into the loan) and an ongoing annual premium that's broken into monthly installments. On most modern FHA loans the annual premium lasts the life of the loan unless you refinance.
FHA is especially popular with first-time buyers, borrowers rebuilding credit after a setback, and anyone whose path to a home is constrained by down payment cash. The break-even versus a low-down-payment conventional loan depends on credit score and how long you plan to hold the loan.
Related terms
Other terms you'll see alongside FHA Loan
Mortgages backed by the Department of Veterans Affairs for eligible service members, veterans, and qualifying surviving spouses.
Zero-down-payment mortgages backed by the US Department of Agriculture for buyers in eligible rural and suburban areas.
The insurance premium paid on FHA loans, structured as both an upfront charge and an ongoing annual premium.
Mortgages not insured or guaranteed by a government agency, typically sold to Fannie Mae or Freddie Mac.
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