FHA Loans

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Definition

Affordable Financing for First-Time and Growing Homebuyers

An FHA home loan is a mortgage insured by the Federal Housing Administration (FHA), a division of the U.S. Department of Housing and Urban Development (HUD). The FHA provides insurance to approved lenders, which reduces lender risk and allows borrowers to qualify with more flexible credit and down payment requirements.

Description

Trusted Partnerships Built

FHA home loans are designed to make homeownership more accessible, particularly for first-time homebuyers and borrowers with limited savings or less-than-perfect credit. Because the loan is federally insured, lenders can offer more accommodating underwriting standards compared to conventional loans.

Down Payment

As low as 3.5% with a minimum qualifying credit score.
Credit Requirements

More flexible credit guidelines, including higher allowable debt-to-income ratios.
Private Mortgage Insurance (PMI)

Requires both an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP), which is typically required for the life of the loan.
Loan Limits

Subject to FHA loan limits that vary by county and are set annually.
Property Types

Primarily for owner-occupied primary residences; the property must meet FHA appraisal and safety standards.
Rates and Terms

Often competitive and sometimes lower than conventional loans for borrowers with lower credit scores.
Assumable Loan

FHA loans are assumable, allowing a qualified buyer to take over the existing loan under certain conditions.
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