30-Year fixed FHA loan

Quick insights

• The 30-year fixed FHA loan offers consistent monthly payments, making it easier to budget long-term.
• FHA loans allow credit scores as low as 500 with a 10% down payment or 580 with 3.5% down.ec-fha-loan-req-2025
• FHA loans require both upfront and annual mortgage insurance premiums (MIP), which may last for the life of the loan.

A 30-year fixed rate FHA loan offers first-time homebuyers a great combination of long-term stability and affordability. With this type of loan, you lock in a fixed interest rate for the entire 30 years, ensuring that your monthly payments remain predictable. The upfront costs can also be lower compared with conventional 30-year mortgages. Let’s review the details.

What is a 30-year FHA mortgage?

A 30-year FHA mortgage is a government-backed loan designed to make homeownership more accessible, especially for first-time homebuyers. Backed by the Federal Housing Administration (FHA), a 30-year loan offers a fixed interest rate. Monthly payments can be predictable, helping homebuyers manage repayment.

How does the FHA 30-year fixed mortgage work?

An FHA 30-year fixed mortgage allows borrowers to finance a home with a stable interest rate and lower upfront costs. Because the loan is insured by the FHA, the FHA guidelines may help buyers with lower credit scores or smaller down payments to qualify. Borrowers make monthly payments over a 30-year period, with portions going toward interest and the principal until the loan is repaid.

FHA 30-year fixed rate mortgage requirements

To qualify for an FHA 30-year fixed mortgage, borrowers must meet certain eligibility criteria set by the Federal Housing Administration:

• Minimum credit score: Typically, 580 for a 3.5% down payment or as low as 500 with a 10% down payment.
• Debt-to-income ratio (DTI): Generally, a DTI of 43% or lower is preferred, though exceptions may be made.
• Steady income and employment history: Mortgage providers usually require proof of consistent income and employment for at least two years.
• Primary residence requirement: The home must be the borrowers primary residence, not an investment or vacation property.
• Mortgage insurance: FHA loans require both an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP). More on this requirement below.ec-fha-loan-req-2025

What are the benefits of a 30-year fixed FHA home loan?

An FHA 30-year fixed mortgage offers several advantages for homebuyers:

• Lower down payment: Allows homebuyers to put down as little as 3.5%, making homeownership more accessible.ec-fha-loan-req-2025
• Easier qualification: More flexible credit and income requirements compared to conventional loans.
• Stable monthly payments: A fixed interest rate ensures consistent mortgage payments for the entire loan term. 
• Assumable loan: FHA loans are assumable, meaning that a new homebuyer can take over the existing loan under its current terms, including the interest rate. This could be advantageous if the original loan has a lower interest rate than what is currently available in the market.
• Competitive interest rates: Government backing helps keep rates lower than some conventional loan options.

The differences between 30-year FHA and conventional loans

When choosing between an FHA 30-year fixed loan and a conventional 30-year fixed loan, it’s important to understand their key differences. Below is a breakdown of the differences between FHA and conventional loans.

Credit score minimum:

• Conventional: Typically requires a credit score of 620 or higher.ec-crd-score-req
• FHA: Allows for a credit score as low as 500 with a 10% down payment, or 580 with a 3.5% down payment.ec-experian-fha-2024

Down payment minimum:

• Conventional: Typically, conventional loans require at least 3% to 5% down, but 20% is needed to avoid private mortgage insurance (PMI).ec-experian-conventnl-loan
• FHA: FHA loans require a minimum of 3.5% down with a 580+ credit.ec-experian-fha-2024

Mortgage insurance:

• Conventional: Requires PMI if down payment is less than 20%; can be removed once 20% equity is reached.ec-experian-conventnl-loan
• FHA: Requires annual/monthly mortgage insurance premiums (MIP) for the life of the loan if less than 10% is put down; MIP can be removed after 11 years if at least 10% was put down.ec-experian-fha-2024

What do I need to know about mortgage insurance premium (MIP)

FHA loans require MIP, which includes both an upfront premium (UFMIP) and an annual premium that is added to monthly mortgage payments. The upfront cost is 1.75% of the loan amount, while the annual MIP depends on the loan size, terms and down payment amount—specifically the loan-to-value (LTV) ratio. Unlike PMI on conventional loans, annual MIP remains for the life of the loan unless a 10% or greater down payment is made, bringing the LTV to 90% or less. In that instance, MIP can be removed after 11 years.

Loan term options besides a 30-year FHA loan

While FHA loans are often associated with a 30-year fixed rate, they also offer 15-year and 20-year fixed terms. Loan terms can affect interest rate and monthly payments. Shorter terms (15 or 20 years) tend to have lower interest rates, reducing total interest paid over time. Monthly payments are higher because the loan is paid off in a shorter period.

Some of the reasons you may want to consider a shorter FHA loan term include: 

• Paying off the mortgage faster and building equity quicker.
• Lowering total interest costs over the life of the loan.
• Eliminating mortgage payments sooner.

In summary

FHA loans can be an appealing option for borrowers who have lower credit scores, higher debt-to-income ratios or lower down payments but need more flexible qualification requirements. FHA loans provide greater accessibility for first-time homebuyers and individuals with lower credit scores. If you’re considering a 30-year fixed rate FHA loan, speak to a Home Lending Advisor to explore your options and find a fit for your financial situation.