Definition
FHA loans are government-insured mortgages allowing low down payments (minimum 3.5%) and flexible credit requirements. FHA mortgage insurance protects lenders, requiring upfront and annual premiums from borrowers. They're particularly popular for first-time buyers with limited savings.
Where you’ll meet it
Am I ready? Money, credit, and what it really costs
See it in Buying my first home · Step 1About this term
FHA loans require minimum 3.5% down payment and credit scores as low as 500 (though 580+ is more common). FHA mortgages insurance is required for the life of the loan or at least 11 years. FHA loans are popular for first-time buyers and have more flexible qualification standards than conventional loans.
Pro Tip
FHA loans are excellent for first-time buyers with lower credit scores or savings; compare total FHA cost (with mortgage insurance premium) versus conventional cost.
Example
A first-time buyer with a 600 credit score and $12,000 saved for a $400,000 home can qualify for an FHA loan with 3% down.