A Federal Housing Association (FHA) loan is a mortgage insured by the FHA. By insuring the loan, the FHA offsets the risk associated with lending to low- to moderate-income borrowers. To obtain approval for an FHA loan, the borrower must satisfy the following requirements:

  • Steady employment history
  • Ability to pay
  • Financial soundness
  • Residency

Read more details on FHA loan requirements and find out the facts about FHA loans. Be sure to compare FHA loan rates to get the best deal. FHA loan rates can be lower than conventional loan rates like the 30-year fixed, but they can end up being more expensive due to mortgage insurance costs. Mortgage loans with less than 20 percent down generally have to carry mortgage insurance, but the insurance on FHA loans is more expensive than insurance on conventional loans. In addition, FHA borrowers are charged an upfront fee of 1 percent of the total loan that often is added to the total amount borrowed.

FHA loan vs. 30-year fixed
FHA loan 30-year fixed
House price $220,000 $220,000
Loan amount* $199,980 $198,000
Interest rate 4.5% 4.875%
Principal + interest $1,013 $1,048
Mortgage insurance $182 $102
Total monthly payment $1,195 $1,150

*FHA loan has 1 percent upfront premium added to loan amount.