FHA Loan Facts to Consider

An FHA loan is a loan for those who may not otherwise qualify for a mortgage, especially first-time home buyers. Here is what you need to know before considering getting one.

What is an FHA loan?

The Federal Housing Administration (FHA) provides mortgage insurance on loans made by FHA-approved lenders. These kinds of loans can help those who may not otherwise qualify for a mortgage, especially first-time home buyers with getting needed financing.

FHA Loan Info

FHA loans offer lower down-payment options compared to conventional loans. The credit expectations are more reasonable and the income requirements are more flexible. 

  • A borrower’s credit score for an FHA loan must be at or above around 580, which is considerably lower than a conventional loan.
  • Conventional loans require a 5% to 20% down payment. FHA mortgages are 3.5% to 10%. Specific percentages for down payments are determined by the borrower’s credit.
  • The FHA does not necessarily require a credit history.


  • Fixed-rate of interest.
  • FHA requires mortgage insurance when borrowers pay down less than 20% on the loan.
  • The borrower must pay an upfront premium and an annual premium mortgage insurance.
  • The borrower pays the upfront as the borrower gets the loan, and they pay an annual payment every month.
  • The upfront is typically 1.75% of the loan amount, and the annual payment is typically .85% of the loan amount.

Get Cash-out

The FHA also provides cash-out refinancing for those who need financing for things such as college or major home improvements. An FHA cash-out refinancing mortgage may offer lower interest rates than traditional home equity financing loans; you may qualify for one of two FHA mortgage plans which offer cash-out plans. FHA refinancing loan offers amounts up to 85% of the appraised value. Each program has its own specific requirements and rules; talk to us about your options under FHA cash-out refinancing mortgages.

About the lenders

  • Borrowers receive their home loans from FHA-approved lenders, so some lenders differ on their rates and costs for the same loan.
  • If there was a default or a loss on the loan, the FHA would cover it, so that the lender would be safe.
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