FHA Loans Explained: Who Qualifies and What It Costs
FHA loans are mortgages insured by the Federal Housing Administration, designed to make homeownership accessible to buyers who might not qualify for conventional financing — particularly those with lower credit scores or limited savings for a down payment. Who tends to qualify FHA loans generally allow for lower minimum credit scores than conventional loans, and down payments can be as low as 3.5% for borrowers who meet the higher end of the program's credit score requirements. Borrowers with lower scores within the program's allowed range may still qualify but typically need a larger down payment. Because the FHA insures the loan rather than issuing it directly, actual approval still comes from a private lender, and individual lenders can layer their own additional requirements ("overlays") on top of the FHA minimums. The tradeoff: mortgage insurance FHA loans require mortgage insurance premiums (MIP) — both an upfront premium, usually financed into the loa...