An FHA mortgage is a loan backed by the Federal Housing Administration (FHA) and the Department of Housing and Urban Development (HUD) that are available to help first-time homebuyers get into a home. These government-backed loans are typically available with much lower down payments and usually have lower minimum credit score requirements than a conventional mortgage from a private lender, which makes them a good option for first-time homebuyers or lower-income buyers who haven’t owned a home in the last three years.
There are a few requirements that may make obtaining an FHA loan harder for some borrowers. FHA loans are available to borrowers with a credit score of 580 or higher, but if a borrower can put 10% or more down, that threshold drops to 500. Additionally, Private Mortgage Insurance (PMI) is required for all FHA loans.