When you’re looking to buy a home, there are several types of mortgages you can choose from. One of the most popular choices is the FHA loan, which is backed by the federal government.
According to the Mortgage Bankers Association, nearly 20% of all mortgage applications right now are for FHA loans.
So, should you consider getting one now? Let’s break it down.
What Is an FHA Loan?
An FHA loan is a mortgage that is insured by the Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD). The FHA has been supporting homebuyers since 1934.
While the FHA doesn’t actually lend you the money, it guarantees your loan. This means if you cannot pay back your mortgage, the government will help repay the lender. As a result, lenders are a bit more flexible with who they lend to.
FHA loans are especially popular with first-time homebuyers because they are easier to qualify for compared to other mortgages. You can apply for them through any lender that works with FHA loans.
Benefits of Getting an FHA Loan Now
1. Lower Interest Rates
While mortgage interest rates can be high, FHA loans often offer lower rates compared to conventional loans. For example, on September 15, 2025, the average rate for a conventional loan was 6.40%, but FHA loans were at 5.96%.
That difference could save you about $36,000 in interest on a $350,000 home over 30 years. You’d also have about $100 more each month to spend elsewhere.
2. Easier for People with Lower Credit Scores
If your credit score isn’t great, you still might qualify for an FHA loan. While conventional loans require a credit score of at least 620, FHA loans can be available to people with scores as low as 500 (depending on your down payment).
However, many lenders still set their own requirements, so you may need to shop around.
3. Low Down Payment Requirements
Coming up with a large down payment can be hard, but an FHA loan only requires as little as 3.5% down if your credit score is 580 or higher. That’s $10,500 on a $300,000 house. With a score between 500 and 579, you’d need to put 10% down.
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