What is an FHA loan?
FHA stands for the Federal Housing Administration. The FHA doesn't lend you money. It insures the loan, which acts as a safety net for the lender. That insurance lets lenders approve buyers with smaller down payments, lower credit scores, or higher debts than a conventional loan usually allows.
Who is an FHA loan best for?
The difference between FHA and conventional is usually smaller than people think. Where FHA really shines is lower credit. Picture a buyer with a score around 620 putting 3.5% down. Compared to a 3% down conventional loan, that buyer will usually have a lower payment with FHA, and might not qualify for the conventional loan at all.
Example only. Not an offer of credit. Eligibility varies.
FHA is also more flexible on debt-to-income ratio and less sensitive to credit in its pricing. For buyers with strong credit, conventional usually wins. I run both and let you decide.
What do you need to qualify?
- Steady income you can document.
- Primary residence: you must live in the home. FHA can't be used for second homes or rentals (though you can buy a 2–4 unit property and live in one unit).
- Credit: 580+ for 3.5% down. Past credit issues aren't automatically a deal-breaker.
- Property condition: the appraiser checks that the home meets FHA safety standards.
How does FHA mortgage insurance work?
FHA has two parts to its mortgage insurance:
| Part | How it works |
|---|---|
| Upfront premium | 1.75% of the loan amount, usually added to the loan rather than paid in cash |
| Monthly premium | Part of your monthly payment. Priced the same regardless of credit. With less than 10% down, it usually lasts for the life of the loan |
Lifetime mortgage insurance sounds worse than it usually is. Most people refinance or sell long before it matters, and many of my clients refinanced from FHA to conventional when rates dropped during the pandemic.
FHA mortgage insurance terms are set by HUD and subject to change.
Are FHA appraisals harder?
FHA appraisals do call for repairs a little more often, for things like peeling paint on older homes, missing handrails, or a worn-out roof. In my experience the industry overstates this, but it's worth knowing going in. Those repairs usually need to be done before closing.
Can you use FHA for a condo?
More easily than you used to. FHA now allows spot approvals for individual units, even if the whole complex isn't FHA-approved. It's still a little tougher than conventional, but doable.
Comparing loan types? Read FHA vs. Conventional Loans in Oregon, or start with the step-by-step guide.
Related guides
Frequently asked questions
What credit score do you need for an FHA loan?
FHA allows 3.5% down with a score of 580 or higher. Lenders can set their own minimums, which is one reason working with a broker who compares many lenders helps.
Is an FHA loan only for first-time buyers?
No. Anyone can use an FHA loan for a home they’ll live in as their primary residence.
Does FHA mortgage insurance ever go away?
With less than 10% down, FHA’s monthly mortgage insurance usually lasts for the life of the loan. Most people remove it by refinancing into a conventional loan once they have enough equity.
Can I buy a condo with an FHA loan?
Often, yes. FHA now allows spot approvals for individual units, even when the whole complex isn’t FHA-approved. Send me the address before you fall in love with the unit.
Is FHA cheaper than conventional?
For buyers with lower credit scores, often yes. FHA mortgage insurance costs the same regardless of credit, while conventional PMI rises as scores fall. Compare them here.
Educational only, not a commitment to lend. Program guidelines, limits, and pricing change, and every loan is subject to underwriting approval. Example numbers are illustrations, not quotes.
Kathy A 
Brent C 
Sehrish M