FHA Loans

Government-backed mortgages perfect for first-time homebuyers

What is an FHA Loan?

FHA loans are mortgages insured by the Federal Housing Administration. They're designed to help first-time homebuyers and those with less-than-perfect credit achieve homeownership with lower down payment requirements and more flexible qualification standards.

Low Down Payment

Just 3.5% down payment required

Flexible Credit Requirements

Accept credit scores as low as 580

Government Backing

FHA insurance protects lenders

FHA Quick Facts

3.5%
Minimum down payment
580
Minimum credit score
57%
Maximum debt-to-income ratio
$472K
2024 loan limit (most areas)

FHA Loan Options

30-Year Fixed
Rate: 6.50% - 7.00%
Monthly payment on $200K loan: $1,264

Most popular FHA option with stable payments

15-Year Fixed
Rate: 6.00% - 6.50%
Monthly payment on $200K loan: $1,687

Faster payoff with higher monthly payments

5/1 ARM
Rate: 5.75% - 6.25%
Monthly payment on $200K loan: $1,167

Lower initial rate, adjusts annually after 5 years

FHA Qualification Requirements

Credit Score
580 minimum
Down Payment
3.5%
Debt-to-Income
≤ 57%
MIP Required
Yes

Understanding FHA Mortgage Insurance (MIP)

FHA loans require mortgage insurance premiums (MIP) to protect lenders. This includes both an upfront premium and annual premiums.

Upfront MIP
1.75%

Of loan amount, paid at closing or financed into loan

Annual MIP
0.55%

Of loan amount annually, paid monthly with mortgage payment

FHA Loan Pros and Cons

Advantages

  • Low 3.5% down payment requirement
  • Accept credit scores as low as 580
  • Higher debt-to-income ratios allowed
  • Down payment can be a gift from family
  • Assumable loans (with qualification)

Considerations

  • Mortgage insurance required for life of loan
  • Loan limits vary by area
  • Property must meet FHA standards
  • Primary residence only
  • Upfront and annual mortgage insurance premiums