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Is an FHA mortgage for you?
When you’re ready to buy a home but don’t have enough savings for a 20% down payment, you have financing options.
The Federal Housing Administration (FHA) is a government entity that insures mortgages for homebuyers with down payments as low as 3.5%. The alternative option for buyers with low down payments is to obtain a conventional mortgage insured by non-government entities.
In both cases, homebuyers pay a monthly mortgage insurance premium in addition to interest and principal payments on the mortgage. The mortgage insurance premium is paid for a set number of years or until you pay off the mortgage. Is one type of low down payment mortgage better than the other? Here are some features to compare for a 30-year fixed rate mortgage with a minimum down payment:
Chart update 10/19/26
| FHA-insured mortgage | Private mortgage insurance | |
| Minimum down payment | 3.5% | 3% |
| Mortgage insurance premium | 0.55% of the mortgage balance | 0.68% of the mortgage balance |
| Mortgage insurance cancellation | Mortgage insurance either continues for the life of the mortgage or (for a down payment of 10% or more) ends after 11 years. | Mortgage insurance is cancelled at the owner’s request when the loan to value is 80%. |
| Credit score standards | Lower credit score standards | Higher credit score standards |
Want to discuss your homebuying options? Contact me for a free consultation!
