An FHA loan is a government-backed mortgage insured by the Federal Housing Administration or FHA for short. Popular with first-time homebuyers, FHA home loans require lower minimum credit scores and down payments than many conventional loans. Although the government insures the loans, they are actually offered by FHA-approved mortgage lenders. FHA loans come in 15- and 30-year terms with fixed interest rates.
Mortgage Insurance Premium, also known as MIP, is required on all FHA loans. They are fixed rates regardless of your credit score and debt to income unlike private mortgage insurance with conventional loans. The amount you pay varies on the amount being borrowed and your loan-to-value (LTV).