What Are the Requirements of an FHA Loan?

To get an FHA loan, you need a credit score of at least 580 to put 3.5% down, or a score of 500 to 579 with 10% down; FHA does not insure loans to borrowers with lower scores. You also pay an upfront mortgage insurance premium of 1.75% of the loan plus an annual premium, usually 0.55% a year on a 30-year loan with less than 5% down. The home must be your primary residence, it must meet FHA's property standards, and the loan must fit under your county's 2026 FHA limit, which runs from $541,287 to $1,249,125 for a one-unit home.

What is an FHA loan?

An FHA loan is a mortgage insured by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD). FHA does not lend money. You borrow from an FHA-approved lender, and FHA pays the lender's claim if the loan goes to foreclosure. That insurance is why FHA lenders can approve scores as low as 500, and it is what your mortgage insurance premiums pay for.

You can also apply through a broker sponsored by an FHA-approved lender; see whether a broker can offer FHA, VA, or USDA loans.

What credit score and down payment do you need?

FHA ties your maximum loan to your credit score. It uses the Minimum Decision Credit Score: the middle score when the lender pulls three, the lower one when there are two. On a joint loan, the lowest borrower's score counts.

The down payment is a percentage of the price or the appraised value, whichever is lower. On a $300,000 home that appraises at $300,000:

• Score of 600: 3.5% x $300,000 = $10,500 down, for a $289,500 base loan.
• Score of 560: 10% x $300,000 = $30,000 down, for a $270,000 base loan.

If the home appraises below the price, the down payment is figured on the lower appraised value, and you pay the gap in cash unless the seller lowers the price. Closing costs and prepaid items, such as escrow for taxes and insurance, come on top of the down payment. The seller, builder, or another interested party can pay up to 6% of the sales price toward those costs.

If you have no credit score, FHA lets the lender approve you through a manual review of nontraditional credit, such as your rent payment history. These are FHA's floors. A lender can set a higher minimum score of its own, so ask each lender what it requires. Minimum credit scores by loan type compares FHA with conventional and VA rules.

How much is FHA mortgage insurance?

Every FHA loan carries two premiums:

1. Upfront premium (UFMIP): 1.75% of the base loan amount. You either pay all of it in cash at closing or add all of it to the loan.
2. Annual premium (MIP): a yearly rate, collected in your monthly payment.

Annual MIP on loans longer than 15 years:

Loans of 15 years or less pay 0.15% to 0.65%.

Example: the $289,500 base loan above.

• UFMIP: $289,500 x 1.75% = $5,066.25. Financed, the loan becomes $294,566.25.
• First-year annual MIP: $289,500 x 0.55% = $1,592.25 a year, or about $132.69 a month. FHA figures it on your average balance each year, so it falls slowly.

With less than 10% down, the only way to stop the annual premium is to refinance or pay off the loan. How to calculate mortgage insurance compares this with conventional PMI.

What debt-to-income ratio does FHA allow?

Lenders run every FHA application through FHA's TOTAL Mortgage Scorecard, an automated tool that rates the risk of your whole file. With an Accept result, the lender relies on TOTAL's risk assessment instead of the manual ratio limits below, but the lender still makes the final decision. If TOTAL refers the file, an underwriter reviews it by hand under these limits:

The housing ratio is your total mortgage payment (with taxes, insurance, MIP, and HOA dues) divided by gross monthly income. The total debt ratio adds your other monthly debts. The main compensating factors have set thresholds:

• Cash reserves: at least 3 months of total mortgage payments left after closing for a 1-2 unit home, or 6 months for 3-4 units, not counting gifts or borrowed money.
• Minimal increase in housing payment: the new payment is no more than $100 or 5% above your current rent or mortgage payment, whichever is less, with a 12-month payment history showing no more than one 30-day late payment.
• Residual income: the money left after all monthly obligations meets or beats VA's residual income table for your household size and region.

Example: With $6,000 a month in gross income and no compensating factors, the limits are $1,860 for the mortgage payment (31%) and $2,580 for all debts (43%).

The ratios use income the lender can document. The lender verifies your most recent 2 years of employment and income, and the income must be reasonably likely to continue for at least the first 3 years of the loan.

Two more rules can block approval regardless of score or ratios. You must be a U.S. citizen, a lawful permanent resident, or a citizen of Micronesia, the Marshall Islands, or Palau; since May 25, 2025, other non-permanent residents are not eligible. And you cannot have delinquent federal non-tax debt, such as a defaulted federal student loan or a debt left from a past FHA foreclosure, until it is resolved.

What are the 2026 FHA loan limits?

FHA sets a limit for each county, between a national floor and ceiling. For FHA case numbers assigned on or after January 1, 2026:

Alaska, Hawaii, Guam, and the U.S. Virgin Islands have higher limits. A county's one-unit limit is set at 115% of its median home price when that falls between the floor and ceiling. Look up your county on HUD's FHA Mortgage Limits search before you make an offer.

How long do you wait after bankruptcy or foreclosure?

FHA counts from the date your case number is assigned, which happens early in the application:

You also need to show good credit since the event, or no new debt at all. Divorce does not count as an extenuating circumstance for a foreclosure.

What property and appraisal standards apply?

Occupancy. FHA loans are for a home you will live in. One of the borrowers has to occupy it within 60 days of signing the mortgage and plan to stay at least a year. How long you need to live in an FHA home covers renting it out later.

Property type. FHA insures one- to four-unit homes. A condo must be in an FHA-approved project, have FHA single-unit approval, or meet FHA's site condo definition.

Appraisal. An FHA appraiser assigned by the lender values the home and checks HUD's Minimum Property Requirements, which say every FHA-insured home must be safe, sound, and secure. When something falls short, such as a broken heating system or a hazard to occupants, the appraiser must list the repair and its estimated cost, and the lender can order more inspections.

For a home that needs major work, an FHA 203(k) loan finances the price and the repairs in one mortgage; see FHA 203(k) requirements. To compare FHA with a conventional loan's credit, down payment, and PMI rules, see the requirements of a Fannie Mae or Freddie Mac loan.