An FHA loan is a mortgage insured by the Federal Housing Administration. It allows lower credit scores and smaller down payments than conventional loans, making homeownership more accessible.
FHA loans are designed for borrowers who may not qualify for conventional financing. They accept credit scores as low as 580 with a 3.5% down payment, or scores as low as 500 with a 10% down payment. This makes them popular with first-time homebuyers and borrowers rebuilding their credit.
The trade-off is that FHA loans require mortgage insurance premiums (MIP) for the life of the loan in most cases. This includes an upfront premium (usually 1.75% of the loan amount) and an annual premium split into monthly payments. Unlike conventional PMI, FHA mortgage insurance typically cannot be removed without refinancing into a conventional loan.
FHA streamline refinancing offers a simplified process for existing FHA borrowers to refinance with reduced documentation and no appraisal requirement. This can be a faster, cheaper way to take advantage of lower rates if you already have an FHA loan.
A conventional loan is a mortgage that is not backed by a government agency like the FHA, VA, or USDA. Conventional loans typically require higher credit scores and larger down payments but offer competitive rates.
PMI (Private Mortgage Insurance)Private mortgage insurance is a monthly premium that protects the lender if you default on your loan. PMI is typically required on conventional mortgages when your down payment is less than 20%.
Credit ScoreA credit score is a three-digit number (typically 300 to 850) that represents your creditworthiness. Lenders use it to determine your mortgage eligibility and the interest rate you qualify for.
See how this affects your refinance
Use real Federal Reserve data to calculate your potential savings.
Try the Refinance Calculator