FHA loans: 3.5% down, explained before you commit
FHA financing opens the door with a low down payment and flexible credit guidelines — but it comes with mortgage insurance that works differently than PMI. We walk through exactly what it costs and when it's the right pick.
Who an FHA loan fits
Insured by the Federal Housing Administration, FHA loans exist to make homeownership reachable for buyers who don't have a large down payment saved or a long credit history yet.
First-time buyers
Low down payment and more flexible debt-to-income guidelines make FHA a common starting point.
Credit scores in the 580–660 range
FHA guidelines are generally more forgiving of past credit events than conventional financing.
Buyers using gift funds
FHA allows the full down payment to come from a gift, which many conventional programs restrict.
What FHA mortgage insurance actually costs
An illustrative $350,000 FHA purchase with 3.5% down.
| Item | Rate | Amount | When it's paid |
|---|---|---|---|
| Upfront MIP | 1.75% | $5,916 | Financed into loan |
| Annual MIP | 0.55% | $1,860/yr | Monthly, in payment |
Illustration only. Actual MIP rates depend on your loan amount, term, and loan-to-value ratio; on most 30-year FHA loans, MIP lasts for the life of the loan unless you refinance or put 10% or more down.
Where FHA helps
- 3.5% down payment with a 580+ credit score
- More flexible on past credit events and higher debt-to-income ratios
- Down payment can come entirely from a gift
- Available on 1–4 unit properties, including owner-occupied multi-family
What to weigh
- Mortgage insurance often lasts for the life of the loan
- Upfront MIP adds to your loan balance
- Loan limits are lower than conventional in most areas
- Primary residences only — no second homes or investment property
FHA loan questions
What's the minimum down payment for FHA?
3.5% with a credit score of 580 or higher. Scores between 500 and 579 are sometimes eligible with 10% down, depending on the lender.
Can I ever remove FHA mortgage insurance?
If you put down less than 10%, MIP typically lasts for the life of the loan. The common path off it is refinancing into a conventional loan once you've built enough equity.
What's the 2026 FHA loan limit?
$541,287 for a single-family home in most counties, including Connecticut, rising in designated high-cost areas.
Is FHA only for first-time buyers?
No — anyone who meets the credit and property guidelines can use FHA financing, including repeat buyers, as long as it will be their primary residence.
See what FHA looks like for your scenario
No cost, no obligation — we'll show you FHA alongside conventional so you can compare both.