Loan Types

FHA Loan

An FHA loan is a mortgage insured by the Federal Housing Administration. It often allows a lower down payment and more flexible credit guidelines than conventional loans, which helps many first-time and credit-rebuilding buyers. The trade-off is mortgage insurance (MIP), which on many FHA loans can last longer than conventional PMI.

FHA loans are popular with first-time buyers and folks rebuilding credit because the guidelines tend to be more forgiving on credit and down payment than conventional financing. The government doesn’t lend the money; it insures the loan, which lets lenders offer those flexible terms.

The main cost to weigh is mortgage insurance. FHA loans carry an up-front premium plus an annual one, and on many of today’s FHA loans that annual premium sticks around for a long time unless you refinance into another program. For some buyers that’s a fair price for getting in the door; for others, a conventional loan ends up cheaper. I can compare both for your situation.

Related terms

Conventional Loan

A conventional loan is a mortgage that isn't backed by a government program like FHA or VA. It often needs solid credit, but it can allow down payments as low as 3% and lets you drop mortgage insurance once you build enough equity. It's the most common loan type for many buyers.

MIP (Mortgage Insurance Premium)

MIP, or mortgage insurance premium, is the insurance you pay on an FHA loan. It typically includes an up-front amount plus a monthly charge. Like PMI on conventional loans, it protects the lender, not you. MIP rules differ from PMI, and on many FHA loans it can last longer.

Conforming Loan

A conforming loan is a conventional loan that meets the guidelines and loan limits set by Fannie Mae and Freddie Mac. Staying within the conforming limit often means more competitive terms. Loans above that limit are called jumbo loans and follow different rules, since they can't be sold to those agencies.

Last updated: June 5, 2026

This definition is educational and isn't an offer to lend or financial advice. Rates, programs, and guidelines may change without notice. All loans are subject to credit and property approval.

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