FHA Loan
An FHA loan is a government-backed mortgage designed for buyers with smaller down payments or lower credit scores — as little as 3.5% down with a 580 score. The trade-off is mortgage insurance premiums that, unlike PMI, often last the life of the loan.
The distinction that decides the cost is not the down payment but the insurance. Conventional PMI is temporary — cancellable at 80% of the original value and removed automatically at 78%. FHA mortgage insurance lasts the life of the loan if you put down less than 10%, and eleven years if you put down more, so it does not fall away as you build equity. FHA also charges an upfront premium, usually added to the balance. That makes it a genuine door into ownership for buyers with a lower credit score or a thin deposit, and a more expensive loan to hold for thirty years — which is why refinancing into a conventional loan once equity allows is a standard move rather than an afterthought.
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