As seen in
For today, 24 Feb, 2026, the national average of 30-year FHA mortgage APR is 3.440%, down compared to last week's of 3.490%. The national average 30-year FHA refinance APR is 3.460%, down compared to last week's 3.520%
What is FHA Loan?
Federal Housing Administration (FHA) loans are federally-backed mortgages designed for homeowners who
may have lower than average credit scores. FHA loans are backed by the Federal Housing Administration,
an agency under the jurisdiction of the Department of Housing and Urban Development. FHA loans are
insured by the FHA, which simply means that organization protects your lender against loss if you
default on your loan. It is the largest insurer of residential mortgages in the world, insuring tens of
millions of properties since 1934.
How to Qualify for an FHA Loan?
Your lender will evaluate your qualifications for an FHA loan as it would any mortgage applicant. It's
important to keep in mind that, as a general rule of thumb, the lower your credit score and down
payment,
the higher the interest rate you'll pay on your mortgage. Have verifiable income.
- Be able to afford the housing payment AND any existing debt.
- Able to pay least a 3.5% down payment (or 10% if your CS is below 580).
- Have an established credit history.
- Have a FICO score of at least 580-640.
- Home that does not exceed FHA loan limits (range from $356,362– $822,375 and vary by county)
- Apply for the correct type of FHA loan.
FHA Loans vs. Conventional Mortgages
FHA loans require mortgage insurance regardless of down payment amount, compared to conventional loans
where you need mortgage insurance for down payments under 20%.
FHA mortgage insurance payments will be the same regardless of your credit score. For conventional
loans, because they are not insured by the government, it can be harder to qualify for a conventional
loan versus an FHA loan.
Lenders may require you to have a higher credit score, make a larger down payment, or meet other
financial requirements before they approve your loan application.
| Conventional Loans | |
|---|---|
| Credit Score Minimum | 620 |
| Down Payment | Between 3% to 20% |
| Long Terms | 10, 15, 20, 30 years |
| Mortgage Insurance Premiums | PMI: 0.55% to 2.25% |
| Interest Type | Variable rate, fixed rate |
| FHA Loans | |
|---|---|
| Credit Score Minimum | 500 |
| Down Payment | 3.5% for credit scores of 580+; 10% for credit scores of 500-579 |
| Long Terms | 15 or 30 years |
| Mortgage Insurance Premiums | Upfront premium: 1.75% of the loan amount; annual premium: 0.45% to 1.05% |
| Interest Type | Fixed rate |
How to Apply for an FHA Loan?
These are the steps to apply for an FHA loan:
- Find a lender - the first step to getting an FHA home loan is finding an FHA-approved lender.
- Provide basic details - when you initially apply for an FHA loan, be prepared to provide:
- Bank statements, location of home, loan amount, credit history etc.
- Compare Loan Estimates - after submitting an application, the lender must provide a Loan Estimate within three business days.
- When you apply for an FHA loan, lenders will ask about your income, savings, debts, and assets.
- Submitting a variety of financial documents (tax returns, W2s, financial statements, etc.)
What are the types of FHA loans?
There are 4 different types of FHA loans:
- FHA’s 203(b) Basic Home Mortgage loan - This option provides mortgages to buy or refinance either a single-family home or multifamily property for one-to-four-unit homes.
- FHA’s 203(k) program - If the home you want to buy needs some work, this program provides up to $35,000 - rolled into a mortgage for the purchase or refinance of a home - to rehabilitate it.
- Construction to permanent loan - If you don’t want to buy an existing home, an FHA loan can also help you finance the purchase of a home you build.
- Energy-efficient mortgage - This program lets you make “cost-efficient” energy improvements to your home, either for a new home or refinancing your current loan.
How does FHA loan work?
FHA loans are a home buying program backed by the Federal Housing Administration. This agency uses its
FHA mortgage program to make homeownership more accessible to disadvantaged home buyers. FHA does this
by lowering the upfront barrier to home buying.
Reduced down-payments and lower credit score requirements make homeownership more accessible to buyers
who might not otherwise qualify for a mortgage. Although FHA loans are backed by the federal government,
they’re originated (‘made’) by private lenders. Most major lenders are FHA-approved, so it’s relatively
easy to shop around and find best deal on an FHA mortgage.
Pros of FHA loans:
Pros of FHA loans:
- Low down payment requirements
- Down payment help allowed
- Good credit not required
- Sellers can help with closing costs for an FHA loan.
- Mortgage insurance can be costly.
- There’s a limit to how much you can borrow.
- Good credit? Consider other options