• An FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA).
  • These loans offer low down payment and gift options to help borrowers qualify for a home.


  • Smaller down payment required (as low as 3.5%)
  • Allows for gift funds to help with closing costs and/or down payment
  • Allows for seller credit toward recurring and non-recurring closing costs
  • Great for first-time home buyers
  • Competitive interest rates
  • Minimum credit score not required (although lenders have their own requirements)
  • Alternative credit may be used when there is no established credit history


  • Upfront mortgage insurance (UFMIP) ads to the loan balance
  • Monthly mortgage insurance (MI) increases overall payment
  • With less than 10% down payment, mortgage insurance is permanent
  • May have to refinance to remove mortgage insurance (even with sufficient equity)
  • Condominiums must be FHA approved
  • Property must be free of major electrical, structural or foundational issues