What Is an FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration. It is designed for borrowers with lower credit scores and smaller down payments. FHA loans require a minimum 3.5% down payment (with a 580+ credit score) and charge Mortgage Insurance Premiums (MIP) both upfront and annually.
FHA Loan Cost Formula
FHA MIP Rates
| Loan Term | LTV | Annual MIP | Duration |
|---|---|---|---|
| 30 years | > 95% | 0.55% | Life of loan |
| 30 years | ≤ 95% | 0.50% | Life of loan |
| 15 years | ≤ 90% | 0.15% | 11 years |
| 15 years | > 90% | 0.40% | Life of loan |
Frequently Asked Questions
Can I remove FHA MIP?
For FHA loans originated after June 3, 2013 with less than 10% down, annual MIP is required for the life of the loan. The only way to remove it is to refinance into a conventional loan once you have 20% equity.
What credit score do I need for FHA?
A 580 credit score qualifies for 3.5% down. Scores of 500-579 require 10% down. Some lenders have higher minimum score requirements (often 620) even though FHA guidelines allow lower.
What are FHA loan limits?
FHA loan limits vary by county. In 2025, the floor limit is $498,257 for a single-family home, and the ceiling is $1,149,825 in high-cost areas. Check your county's specific limit on the HUD website.