What is an FHA loan and how does it work in Washington?

An FHA loan is a mortgage insured by the Federal Housing Administration, designed to help buyers with lower credit scores or smaller down payments qualify for financing. In Washington, FHA loans require as little as 3.5% down with a 580 credit score, or 10% down with a score between 500–579. The trade-off is mandatory mortgage insurance — both upfront (1.75% of the loan) and annual — for the life of the loan on most FHA mortgages.