# FHA loan

> A mortgage insured by the Federal Housing Administration. It's popular with first-time buyers because the down payment can be as low as 3.5% and the credit requirements are more flexible.

By David Knorr, founder of BuyWise Home. Last reviewed October 28, 2026. Web page: https://www.buywisehome.com/guide/glossary/fha-loan

## Why it matters to you

FHA loans charge mortgage insurance two ways: 1.75% of the loan up front, usually added to the loan, and a yearly fee of about 0.55% for most buyers, split into your monthly payment. With less than 10% down, the yearly fee lasts as long as the loan: the only way out is to refinance, sell or pay it off, and a refinance depends on your equity and rates at the time. With 10% or more down, it ends after 11 years. Compare the total monthly cost with a conventional loan before you choose.

## Related

- [Step 1: Am I ready to buy?](https://www.buywisehome.com/guide/ready-to-buy)
- [Down payment](https://www.buywisehome.com/guide/glossary/down-payment): The part of the price you pay in cash. The loan covers the rest.
- [PMI](https://www.buywisehome.com/guide/glossary/pmi): Insurance you pay when you put down less than 20%. It protects the lender.
- [Appraisal](https://www.buywisehome.com/guide/glossary/appraisal): The lender's independent estimate of what the home is worth.

_General information based on the standard Georgia REALTORS® purchase contract and public guidance. Your own contract decides: read it, and ask your agent or closing attorney about anything that matters. Not legal or financial advice._