August 15, 2025
Loans

Best FHA Loan Lenders Of 2025 – Forbes Advisor


Established by Congress in 1934 amid the Great Depression, the Federal Housing Administration (FHA)—part of the Department of Housing and Urban Development (HUD)—was created to help expand homeownership by facilitating access to affordable financing.

Despite the name, FHA loans aren’t funded by the government. Instead, the FHA insures loans issued by approved lenders. This federal backing means that if a borrower defaults, the FHA reimburses the lender for part of its losses. With that guarantee in place, lenders are more inclined to approve higher-risk applicants, broadening access to homeownership. Case in point? Over 80% of FHA loans in 2024 were issued to first-time buyers, according to HUD.

How Do FHA Loans Work?

FHA loan borrowers pay an upfront fee and annual mortgage insurance premiums (MIP), which fund the loan guarantee program. If you put down 10% or less on the home, you must pay the annual premium for the full loan term. If your FHA down payment exceeds 10%, you pay the upfront fee plus the premiums for 11 years or until the loan term ends, whichever comes first.

The FHA typically requires borrowers to occupy the home within 60 days of closing and use it as their primary residence, with the intention of living there for at least one year.

FHA loans are particularly popular with first-time homebuyers and low- to moderate-income borrowers who may not qualify for conventional loans, thanks to flexible credit requirements, low down payment options and competitive mortgage rates.

FHA Loan Limits

FHA loan limits cap how much you can borrow with an FHA-backed mortgage.

These limits are tied to the conforming loan limits set by the Federal Housing Finance Agency (FHFA) and are updated annually.

Each year, the FHA sets minimum and maximum loan thresholds—known as the “floor” and “ceiling”—based on local housing prices. Limits vary by county and are relative to the number of units in the property (up to four).

Understanding these limits helps borrowers focus their home search on properties that qualify for FHA financing.

Here are the 2025 FHA loan limits for one-unit properties:

  • Low-cost area (floor): $524,225
  • High-cost area (ceiling): $1,209,750



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