ERJ 145 First Officer reported they descended below the Final Approach Fix altitude and Tower issued them a low altitude alert. Flight crew initiated a go around and landed safely.

Narrative

Crew was doing a visual approach to ZZZ on RWY XXL backed up by the RNAV approach. Conditions were clear skies and unrestricted visibility. Approach was briefed as a visual with the RNAV as guidance to use VPI (Vertical Path Indicator) for a constant descent approach to the final approach fix and runway. I was the pilot flying. At 5 miles from the FAF; the PF started adjusting the descent rate to 500ft to slow down and to start configuring the aircraft with a plan to be fully configured up reaching the FAF and continue descent to the runway; however the VPI was still showing just over 500ft high. Pilot monitoring said we are high; pilot flying checked and confirmed the VPI was showing high. PF increased the descent rate to the max of 1200ft. According to the VPI we're now high and also fast very close to the FAF. The pilot monitoring reset the altitude bug to 3;000ft so we could continue our descent through the FAF and stay on profile. Shortly after this the gear was applied and flaps 22. But now the math and the VPI were not agreeing and as this was discussed between PF and PM the RA said 1500ft and since we were still just outside the FAF we should have been at 2;000ft. Now both PF and PM agreed we were low; fast and unstable and PM called for a go-around which pilot flying agreed and initiated. The Tower now inquired as to are situation since they got a low altitude alert on their end. PM advised them of the go-around. The second attempt was completed with out any issues.After landing during the post flight review it was determined that the RNAV approach had an incorrect setting for the FAF and the VPI was not accurately showing which did explain why the mental math was saying we were low but the VPI was saying we were high. While both PM and PF quickly started realizing there was an error occurring with the approach that 5-10 seconds of mental processing put the PF and PM behind the aircraft in a critical phase of flight close to the ground. It was also discussed that during that brief time both pilots were watching the instruments and discussing the situation when the pilot flying (myself) should have been keeping up with the scan because a glance outside would have definitely confirmed we were low on the altitude and the AP (Autopilot) could have been disengaged and a hand flown approach conducted safely. I believe we made the correct decision to go around and do a second attempt in the stable condition. The Captain believes the RNAV FAF was set at above 2;000ft instead of the normal hard altitude of 2;000ft and this is what most likely lead to the VPI being inaccurate. For my part better outside inside scan verifying the mental math to the VPI will help me avoid this scenario in the future. Verifying the FAF is set to a hard altitude was also discussed.