​An FHA mortgage loan is a home financing option insured by the Federal Housing Administration (FHA), a government agency. Designed to make homeownership more accessible, FHA loans are particularly popular among first-time homebuyers and those with lower credit scores or smaller down payments.
Unlike conventional loans, FHA loans require a minimum down payment of just 3.5%, and they are more lenient with credit score requirements, often approving borrowers with scores as low as 580.
FHA loans also require borrowers to pay mortgage insurance premiums (MIP), which protect the lender in case of default. This insurance includes an upfront premium at closing and an annual premium spread across monthly payments. While FHA loans offer easier qualification standards, they have loan limits based on the area and property type and may be more costly in the long term due to mortgage insurance requirements.