FHA loans remain one of the most accessible paths to homeownership for first-time buyers and those with modest credit scores. The Federal Housing Administration insures the loan, which allows lenders to accept lower down payments and more flexible credit histories than many conventional programs. In 2026 the minimum down payment is still 3.5% for borrowers with a credit score of 580 or higher. Scores between 500 and 579 generally require 10% down. Loan limits for a single-family home start at $541,287 in most counties and rise to $1,249,125 in high-cost areas.
Two forms of mortgage insurance apply. An upfront mortgage insurance premium (UFMIP) of 1.75% of the base loan amount is typically financed into the loan. An annual MIP is paid monthly and currently runs about 0.55% for most 30-year loans with lower down payments. Unlike private mortgage insurance on conventional loans, FHA MIP often stays for the life of the loan if you put down less than 10%. That ongoing cost is an important factor when comparing FHA to other options.
To see the real monthly impact, use the FHA loan calculator. Enter the purchase price, down payment, rate, and term. The tool estimates principal and interest plus the monthly MIP so you can compare the total housing payment against a conventional loan scenario. Many buyers also run the same numbers through the main mortgage calculator to keep the comparison apples-to-apples.
FHA loans require the home to meet minimum property standards and must be used as a primary residence. Gift funds are allowed for the down payment, which helps many families. If your credit or savings situation improves after a few years, refinancing into a conventional loan can eliminate the MIP once you reach 20% equity. Until then, the lower barrier to entry makes FHA a practical choice for thousands of American households each year.