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FHA loans are mortgages insured by the Federal Housing Administration, the largest mortgage insurer in the world. The FHA was established in 1934 after The Great Depression, and its continuing mission is to create more homeowners in the U.S. Therefore, it is plainly obvious that the popularity of FHA loans comes from their ability to extend mortgage loans to most people trying to buy a home. It is important to remember that the FHA doesn't lend money, but insures lenders instead.
To qualify, the FHA charges a single upfront mortgage insurance payment (MIP) along with annual mortgage insurance premiums. The mortgage insurance payments from borrowers are mandatory in order to protect lenders from losses in instances of defaults on loans. The upfront MIP is the same for all, which is 1.75% of the loan amounts and can be financed directly into the mortgage loans. The annual MIP varies based on the loan term, loan amount, and loan-to-value (LTV) ratio. If a borrower makes a down payment of 10% or more (LTV ≤ 90%), the annual MIP can be canceled after 11 years. Otherwise, the annual MIP remains in effect for the life of the loan. Use the tables below to figure out proper MIP rates.
Loan Term—Longer than 15 Years
| Loan Amount | LTV Ratio | Annual MIP Ratio |
|---|---|---|
| $726,200 or Less | 95% or Less | 0.5% |
| $726,200 or Less | more than 95% | 0.55% |
| More than $726,200 | 95% or Less | 0.7% |
| More than $726,200 | more than 95% | 0.75% |
Loan Term—15 Years or Less
| Loan Amount | LTV Ratio | Annual MIP Ratio |
|---|---|---|
| $726,200 or Less | 90% or Less | 0.15% |
| $726,200 or Less | more than 90% | 0.4% |
| More than $726,200 | 78% or Less | 0.15% |
| More than $726,200 | 78% - 90% | 0.4% |
| More than $726,200 | more than 90% | 0.65% |
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As with any other big financial decision, take the time to evaluate all options. Veterans and similarly applicable individuals should consider VA loans. Compare rates offered by different lenders.
The Department of Housing and Urban Development (HUD) is the organization that sets specific guidelines for FHA debt-to-income ratios and formulas. To determine house affordability of an FHA loan, use our House Affordability Calculator.
There is no prepayment penalty for FHA loans, so it can make financial sense for some FHA borrowers to supplement an FHA loan with additional payments. Use the More Options section to input monthly, yearly, or single extra payments.
An FHA 203(k) loan allows borrowers to finance both the purchase and renovation of a primary residence. Basically, it allows borrowers to buy and refinance a home that needs work and roll the renovation costs into the mortgage. A minimum of $5,000 must be borrowed and maximum limits are set by the FHA that differs according to locations.
An FHA loan is a mortgage insured by the Federal Housing Administration. It is designed for homebuyers with lower credit scores or smaller down payments. FHA loans are backed by the government, which protects lenders against defaults and allows them to offer more favorable terms to borrowers.
The minimum down payment for an FHA loan is 3.5% of the purchase price if your credit score is 580 or higher. If your credit score is between 500 and 579, you may still qualify but with a higher down payment of 10%.
MIP stands for Mortgage Insurance Premium. It is required on all FHA loans to protect the lender in case you default. There are two types: an upfront MIP of 1.75% of the loan amount (usually financed into the loan) and an annual MIP that is paid monthly. The annual MIP rate depends on your loan term, loan amount, and LTV ratio.
If your down payment is 10% or more (LTV ≤ 90%), the annual MIP can be canceled after 11 years. Otherwise, the annual MIP remains for the life of the loan unless you refinance to a conventional loan. If you put down less than 10%, the MIP is permanent for the loan term.
FHA loan limits vary by county and are updated annually. In 2026, the floor is $498,257 for low-cost areas and the ceiling is $1,149,825 for high-cost areas. Check the HUD website for the exact limit in your county.
An FHA 203(k) loan allows you to finance both the purchase and renovation of a home with a single mortgage. This is useful for buying a fixer-upper. The minimum renovation amount is $5,000, and the work must be completed within six months.