Understanding FHA Loans
FHA loans are mortgages insured by the Federal Housing Administration, designed to help first-time homebuyers and those with lower credit scores achieve homeownership. They require lower down payments and have more flexible qualification criteria than conventional loans, but come with mandatory mortgage insurance premiums.
FHA Mortgage Insurance Premiums
FHA loans have two types of mortgage insurance: an upfront premium (UFMIP) of 1.75% of the base loan amount, which is typically financed into the loan, and an annual premium of 0.55% for most borrowers, paid monthly. These costs protect the lender in case of default and are a key trade-off for the lower down payment requirement.
Frequently Asked Questions
What credit score do I need for an FHA loan?â–¾
You need a minimum credit score of 580 to qualify for the 3.5% down payment option. Borrowers with scores between 500 and 579 can still qualify but must put at least 10% down. Scores below 500 generally do not qualify for FHA financing.
Can I remove FHA mortgage insurance?â–¾
For FHA loans originated after June 2013 with less than 10% down, MIP lasts for the entire life of the loan. If you put 10% or more down, MIP is removed after 11 years. The most common way to eliminate FHA MIP is to refinance into a conventional loan once you have 20% equity.
What are the FHA loan limits?â–¾
FHA loan limits vary by county and are updated annually. In 2026, the standard floor is $498,257 for a single-family home, while high-cost areas can go up to $1,149,825. Check HUD's website for limits specific to your county.
Is an FHA loan only for first-time buyers?â–¾
No. While FHA loans are popular with first-time buyers due to the low down payment, they are available to any qualifying borrower. However, FHA loans must be for a primary residence -- they cannot be used for investment properties or vacation homes.
Calclypso Editorial Team
Reviewed by certified financial professionals. Last updated: April 2026. FHA MIP rates sourced from HUD Mortgagee Letter 2023-05.