FHA Loan
An FHA loan is a mortgage insured by the Federal Housing Administration, designed to make homeownership accessible to borrowers with lower credit scores or smaller down payments.
FHA loans require a minimum down payment of 3.5% and allow credit scores as low as 580 in many cases. They also include mortgage insurance premiums (MIP) — both an upfront premium and a monthly premium — for the life of the loan in most cases.
An FHA loan is not a "bad credit loan." It is a flexible program that serves a wide range of borrowers, including first-time buyers and those rebuilding after financial setbacks. However, the long-term cost of MIP should be weighed against other options.
Why This Matters: FHA loans open doors — but they also carry costs that other programs may not. Comparing FHA to conventional, VA, and USDA options ensures you select the loan that minimizes your total cost over time.
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