What is an FHA loan?
Understand how FHA insurance supports mortgages made by participating lenders.
An FHA loan is a mortgage insured by the Federal Housing Administration and typically originated by an FHA-approved private lender.
FHA generally does not lend the purchase money directly in a typical home transaction; its insurance protects the lender against certain losses.
Borrowers must meet applicable credit, income, property and program requirements, and FHA mortgage insurance adds cost.
How FHA insurance works
FHA insurance protects participating lenders against certain losses when loans meet applicable program requirements. The borrower applies through a lender that offers FHA financing.
Mortgage insurance is part of the loan
FHA loans generally include upfront and annual mortgage insurance premiums under applicable rules. Do not treat this as the same product or cancellation structure as conventional PMI.
The property matters
The property must meet FHA requirements and support the loan. An appraisal serves a lending purpose and does not replace an independent home inspection.
Compare FHA with alternatives
An FHA option may fit one borrower and cost more for another. Compare the rate, insurance premiums, lender charges, payment, cash to close and how long you expect to keep the loan.
Understand the program before choosing a loan
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