FHA Loan.

A government-insured home loan that lets you buy with as little as 3.5 percent down and a lower credit score than most conventional loans require.

Reviewed by Joseph Citizen, Founder · Last reviewed June 6, 2026

Verified June 2026 · Source: U.S. Department of Housing and Urban Development (HUD)

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FHA Loan

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In plain English

An FHA loan is a mortgage backed by the Federal Housing Administration. The government does not lend you the money, a private lender does, but the FHA insures the loan so lenders will approve smaller down payments and lower credit scores. The trade-off is mortgage insurance that, on a low down payment FHA loan, usually lasts the entire life of the loan.

Most useful ages

25 to 45

02The math, step by step

On a $400,000 home, an FHA loan needs 3.5 percent down, which is $14,000, plus an upfront mortgage insurance premium of 1.75 percent (about $6,755) usually added to the loan. As of 2026 you also pay an annual premium of 0.55 percent that does not go away unless you refinance.

03What this is NOT

Do not confuse with a loan from the government

An FHA loan is not a loan from the government. The FHA insures it; a private lender funds it. It is also not automatically cheaper than conventional, because the insurance can outlast a conventional loan's.