The short answer
- FHA loans need 3.5% down with a credit score of 580 or more, or 10% down with 500 to 579.
- You pay 1.75% of the loan upfront (usually added to the loan) and an annual premium of 0.55% on most loans with 3.5% down.
- With less than 10% down, annual MIP lasts for the life of the loan; with 10% or more, it stops after 11 years.
- In 2026 the one-unit FHA limit is $541,287 in most counties and up to $1,249,125 in the most expensive.
What an FHA loan is
An FHA loan is a mortgage from an ordinary lender that is insured by the Federal Housing Administration, part of HUD. If you stop paying, FHA covers the lender’s loss. That insurance lets lenders accept smaller down payments, lower credit scores and higher debt-to-income ratios than they would on a conventional loan.
You pay for the insurance through mortgage insurance premiums (MIP). Unlike PMI on a conventional loan, MIP has an upfront part and often cannot be cancelled by asking.
Who can get one
| Credit score | Minimum down payment |
|---|---|
| 580 or more | 3.5% |
| 500 to 579 | 10% |
| Under 500 | Not eligible for FHA insurance |
The home must be your main residence, and you usually move in within 60 days. FHA does not require you to be a first-time buyer. Many lenders add their own rules on top of FHA’s, often a minimum score around 620, so compare a few.
A worked example
A $350,000 home with the minimum 3.5% down, 7.25% for 30 years, 0.89% property tax and $1,800 of insurance a year:
- Down payment3.5% of the price$12,250
- Base loan$337,750
- Upfront MIP1.75%, added to the loan$5,910.63
- Principal and interestOn $343,661$2,344.37
- Annual MIP0.55% of the average balance, first year$154.12
- Property tax and insurance$409.58
Over 30 years, the upfront and annual premiums add up to $43,213, and interest to $500,313. To see the same home without mortgage insurance, try our mortgage calculator.
The upfront premium
Every FHA purchase loan carries an upfront mortgage insurance premium (UFMIP) of 1.75% of the base loan amount. It is due at closing, but almost everyone finances it, which adds it to the balance. You then pay interest on it for the life of the loan.
In the example the premium is $5,910.63. Financing it raises the loan to $343,661. If you pay it in cash instead, turn off “Add the upfront MIP to the loan” under More options; the payment drops a little and the cash you need at closing rises.
The annual premium
The annual premium is set by HUD Mortgagee Letter 2023-05, which cut most rates by 0.30 percentage points from March 20, 2023. It depends on the term, the base loan amount and the loan-to-value ratio (LTV):
| Base loan | LTV 90% or less | Over 90% to 95% | Over 95% |
|---|---|---|---|
| $726,200 or less | 0.50% for 11 years | 0.50% for the loan's life | 0.55% for the loan's life |
| Over $726,200 | 0.70% for 11 years | 0.70% for the loan's life | 0.75% for the loan's life |
HUD charges the annual premium on the average balance you owe during each year, collected monthly. That is why it falls a little each year: in the example from $154.12 a month in year one to $152.58 in year two and $132.21 in year 11.
How long MIP lasts
On loans made since June 2013, the rule is simple: with an LTV over 90% (less than 10% down), annual MIP lasts for the whole loan term. With 10% or more down, it ends after 11 years. There is no cancellation at 78% or 80% as there is with PMI on a conventional loan.
Life-of-loan MIP adds up
In the example, MIP for the life of the loan comes to $37,302 in annual premiums on top of the $5,911 upfront premium, unless you refinance out of it.
3.5%, 5% or 10% down
On the same $350,000 home at 7.25% over 30 years:
| Down payment | Loan with UFMIP | Annual MIP | MIP a month | MIP lasts | First payment | All MIP |
|---|---|---|---|---|---|---|
| 3.5% ($12,250) | $343,661 | 0.55% | $154.12 | Life of the loan | $2,908.08 | $43,213 |
| 5% ($17,500) | $338,319 | 0.50% | $137.94 | Life of the loan | $2,855.45 | $39,203 |
| 10% ($35,000) | $320,513 | 0.50% | $130.68 | 11 years | $2,726.72 | $21,667 |
Putting 10% down cuts total mortgage insurance by about half because MIP stops after 11 years. Our down payment calculator shows how long each amount would take to save.
15-year FHA loans
Loans of 15 years or less have much lower annual premiums: 0.15% to 0.40% for base loans up to $726,200, and 0.15% to 0.65% above it.
- Annual MIP
- 0.40%, for 15 years
- First payment
- $3,657.37
- All MIP
- $17,895
- Total interest
- $221,026
- Annual MIP
- 0.15%, for 11 years
- First payment
- $3,374.12
- All MIP
- $9,321
- Total interest
- $206,139
The payment is much higher, but if it fits your budget a 15-year FHA loan cuts both interest and mortgage insurance sharply.
2026 FHA loan limits
FHA only insures loans up to a county limit. For 2026 (case numbers from January 1, 2026), HUD set the one-unit limit at $541,287in lower-cost areas, the “floor”, and $1,249,125 in the highest-cost areas, the “ceiling”, which is 150% of the national conforming limit of $832,750. Alaska, Hawaii, Guam and the U.S. Virgin Islands have higher limits. Two- to four-unit homes have higher limits too.
The limit applies to the base loan before the upfront premium. Look up your county on HUD’s FHA mortgage limits page and enter it under More options; the calculator warns you if the loan is over it.
FHA vs conventional
At the same 7.25% rate on the $350,000 home:
- Loan
- $343,661
- Mortgage insurance
- $154.12 a month, for life
- First payment
- $2,908.08
- All mortgage insurance
- $43,213
- Loan
- $332,500
- Mortgage insurance
- $138.54 a month (0.5% PMI), 12 years 1 month
- First payment
- $2,816.36
- All mortgage insurance
- $20,089
With good credit, conventional usually wins: lower insurance that ends. FHA wins when your score would push PMI toward the top of Freddie Mac’s 0.35% to 0.85% range or beyond, when your debt-to-income ratio is high, or when you need the smallest possible down payment with a modest score. FHA rates are often a little different from conventional rates, so compare real quotes.
Getting rid of MIP
Because MIP usually lasts for the life of the loan, the way out is to refinance into a conventional loan once your equity reaches about 20%, through repayment, rising prices or both. That only makes sense if the new rate and closing costs work; our refinance calculator works out the break-even. Selling the home also ends it.
If you refinance into another FHA loan within three years, HUD credits part of your original upfront premium against the new one.
Debt-to-income and approval
FHA looks at two ratios: your housing payment (including MIP, tax and insurance) as a share of gross monthly income, and all your monthly debts as a share of it. FHA’s standard guides are 31% and 43%, and its automated underwriting can approve higher ratios with strong compensating factors. Our debt-to-income calculator shows your ratios.
Property rules
FHA appraisers check that the home is safe, sound and secure, not just its value. Peeling paint in older homes, a broken heating system or a leaking roof may have to be fixed before closing. Condos must be on FHA’s approved list or get a single-unit approval. Homes with up to four units qualify if you live in one.
Closing costs and gifts
You still pay normal closing costs on top of the down payment and any unfinanced upfront premium. FHA allows the seller to pay up to 6% of the price toward your costs, and the whole down payment can be a documented gift from family, an employer or an approved assistance program.
From application to keys
- Before you shopCheck your credit and get preapproved
Ask lenders to quote both FHA and conventional.
- Offer acceptedApply and get your Loan Estimate
It shows the upfront and monthly MIP.
- Within a few weeksFHA appraisal and underwriting
Repairs flagged by the appraiser may need doing before closing.
- Three days before closingClosing Disclosure
Compare it with your Loan Estimate.
- Closing daySign and get the keys
The upfront MIP is paid or added to the loan.
Common mistakes
- Comparing FHA and conventional on the rate alone, ignoring the upfront premium and life-of-loan MIP.
- Assuming MIP drops off at 20% equity like PMI. It does not; you have to refinance.
- Forgetting that the 1.75% premium is added to the loan, so you start owing more than the price less your down payment.
- Using the national floor when your county’s limit is higher, or the other way round.
- Skipping a conventional quote when your credit score is good.
Using the calculator well
- Enter the price, pick your credit score band and set the down payment (it will not go below FHA’s minimum).
- Use the FHA rate from a real quote and pick the term.
- Pick your state for typical property tax, then add your insurance quote and county loan limit under More options.
- Set the conventional comparison to the down payment, rate and PMI a lender quotes you.
- Read the year-by-year MIP table to see what you pay and for how long.
Key numbers
| Item | Figure |
|---|---|
| Minimum down payment | 3.5% (score 580+), 10% (500 to 579) |
| Upfront MIP | 1.75% of the base loan |
| Annual MIP, over 15 years, up to $726,200 | 0.50% to 0.55% |
| Annual MIP, over 15 years, above $726,200 | 0.70% to 0.75% |
| MIP duration | 11 years with 10%+ down; otherwise the loan term |
| 2026 one-unit FHA limit | $541,287 floor, $1,249,125 ceiling |
| 2026 conforming loan limit | $832,750 |