What Is FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration that lets you buy a home with a credit score as low as 580 and just 3.5% down. Borrowers with scores between 500 and 579 may still qualify with a 10% down payment. FHA loans are one of the most popular options for first-time homebuyers because of their flexible qualifying requirements.

On a $300,000 home, your minimum FHA down payment would be $10,500 (3.5%). You will also pay an upfront mortgage insurance premium (MIP) of 1.75% of the loan amount—$5,068.75 on a $289,500 loan—plus an annual MIP of 0.55% split into monthly payments of about $133.

Key Facts

• Minimum down payment: 3.5% with a 580+ credit score
• Upfront MIP: 1.75% of the loan amount, financed into the loan
• Annual MIP: 0.55% for most 30-year loans with less than 5% down
• 2025 FHA loan limit: $524,225 in most counties, up to $1,209,750 in high-cost areas

Frequently Asked Questions

Does FHA mortgage insurance ever go away?

If you put down less than 10%, MIP stays for the entire life of the loan. With 10% or more down, MIP drops off after 11 years. Many borrowers refinance into a conventional loan once they reach 20% equity to eliminate the premium.

Who qualifies for an FHA loan?

Any borrower who meets credit and income requirements can apply—FHA loans are not limited to first-time buyers. You need a minimum 580 credit score for 3.5% down, a debt-to-income ratio generally below 43%, and the home must be your primary residence.