Which type of loan typically requires a minimal down payment and mortgage insurance for the duration of the loan?

FHA financing is designed to support homebuyers who may not have substantial savings for a down payment. One of its key features is the requirement for a minimal down payment, which can be as low as 3.5% of the home's purchase price. Additionally, FHA loans mandate mortgage insurance premium (MIP) payments for the duration of the loan, which protects the lender in case of default. This insurance is particularly beneficial because it allows borrowers with lower credit scores or less upfront cash to access home loans that they might not qualify for through conventional financing.

In contrast, conventional mortgages often require a larger down payment and, while they may have mortgage insurance, it is not mandatory for the entire loan's duration. USDA financing, aimed at rural homebuyers, can also require no down payment and does have fees similar to mortgage insurance, but these terms differ from the consistent mortgage insurance requirement present in FHA loans. VA financing, intended for veterans, typically does not require any down payment and does not usually mandate mortgage insurance, making it distinct from FHA loans in these respects.