Quick answer
An FHA loan is a mortgage made by a private lender and insured by the Federal Housing Administration, part of HUD. The insurance lets lenders accept a down payment as low as 3.5% with a credit score of 580 or higher, and the borrower pays for it through mortgage insurance premiums.
Key facts
What the insurance costs
Every FHA loan carries an upfront premium of 1.75% of the base loan, usually added to the balance, plus an annual mortgage insurance premium collected monthly. With less than 10% down, annual MIP lasts for the life of the loan; at a starting loan-to-value of 90% or less it ends after 11 years.
Minimum down on a $300,000 home
Down payment: $10,500, base loan $289,500. Upfront premium: $5,066, financed into the loan. Annual MIP at 0.55%: about $133 a month in the first year.
Limits and uses
FHA loans are for homes you’ll live in, and the loan amount is capped by county: for a one-unit home in 2026, between $541,287 and $1,249,125. Scores from 500 to just under 580 need a larger down payment. The FHA loans guide covers the full rules.
Related terms
- Conventional loan, the usual alternative
- Streamline refinance for existing FHA borrowers
Sources
- CFPB — Minimum FHA down payment (Oct 28, 2026)
- HUD Mortgagee Letter 2023-05 — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV; FHA annual MIP ends after 11 years when the starting LTV is at or below (Feb 22, 2023)
- HUD Mortgagee Letter 2026-11 — FHA minimum score for maximum financing; FHA minimum decision credit score (90% LTV cap from 500 to 579) (Oct 8, 2026)
- HUD — 2026 FHA loan limit floor (one-unit, low-cost areas); 2026 FHA loan limit ceiling (one-unit, high-cost areas) (2026 limit)
- CFPB: FHA loans
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.