finance
FHA loan
A mortgage insured by the Federal Housing Administration, part of HUD, and made by approved private lenders. FHA loans allow low down payments and more flexible credit standards, making them popular with first-time buyers. Borrowers pay an upfront mortgage insurance premium and an annual premium. FHA sets loan limits by area and minimum property standards.
- Exam tip
- FHA insures the loan; it does not lend money. Watch for mortgage insurance premium (MIP) vs. private mortgage insurance (PMI) on conventional loans.
- Example
- A first-time buyer purchases a $300,000 home with an FHA loan and a 3.5% down payment of $10,500.
Related terms & state variants
Sources
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Last verified: 2026-10-23