2026-09-14T00:00:00|6.968|0.023|6.274|0.035|6.725|-0.009|6.623|0.032||
FHA Loans: Low Down Payment, Flexible Credit
FHA loans are government-backed mortgages offering as little as 3.5% down with credit scores starting at 580. Ideal for first-time homebuyers and borrowers with less-than-perfect credit.
What Is an FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development (HUD). FHA does not lend money directly — it insures loans made by approved lenders, protecting them against losses if borrowers default. This government backing allows lenders to offer more favorable terms to borrowers who might not qualify for conventional financing.
FHA Loan Requirements
Down Payment
3.5% minimum with a 580+ credit score. 10% required for scores between 500–579. Down payment can come from savings, gifts, grants, or down payment assistance programs.
Credit Score
Minimum 580 for 3.5% down, 500 for 10% down. Many lenders set higher minimums (often 620). Recent bankruptcies or foreclosures may require waiting periods.
Debt-to-Income
Front-end DTI up to 31%, back-end up to 43%. With compensating factors (reserves, high credit), DTI up to 50% may be accepted. Use our DTI calculator.
Mortgage Insurance
Upfront MIP: 1.75% of loan (rolled into loan). Annual MIP: 0.55% of loan divided by 12. Required for life of loan if down payment is less than 10%.
Property Requirements
Must be your primary residence. Must meet FHA minimum property standards (safety, security, soundness). FHA appraisal required — stricter than conventional.
Loan Limits
Vary by county. Standard limit: $498,257 (2024). High-cost areas (much of California): up to $1,149,825.
FHA Loan Pros and Cons
| Pros | Cons |
|---|---|
| Low 3.5% down payment | MIP required for life of loan (if <10% down) |
| Credit scores as low as 500 | FHA appraisal is stricter than conventional |
| Gift funds allowed for entire down payment | Property must be primary residence only |
| DTI up to 50% with compensating factors | Loan limits may be restrictive in some areas |
| Competitive interest rates | Upfront MIP adds 1.75% to loan cost |
FHA Loan Types
Available FHA Programs
FHA 203(b): Standard purchase or rate-and-term refinance — the most common FHA loan.
FHA 203(k): Purchase and renovate in one loan. Standard 203(k) for major renovations, Limited 203(k) for up to $35,000 in repairs.
FHA Streamline Refinance: Simplified refinance for existing FHA borrowers — reduced documentation, no appraisal required.
FHA Cash-Out Refinance: Borrow up to 80% of home value and receive cash for any purpose.
Check today's FHA mortgage rates or use our FHA calculator to estimate your payment. Not sure if FHA is right? See our FHA vs. Conventional comparison.
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Optimal Blue + Freddie Mac
Expert guidance on fha loans
FHA Loans Explained
Official Government Resources
CFPB — Owning a Home
Consumer Financial Protection Bureau guide to buying a home,
comparing loan offers, and understanding closing.
HUD — Buying a Home
Department of Housing & Urban Development resources for
homebuyers, including FHA program information.
VA — Home Loans
Official VA home loan program information, eligibility, and
Certificate of Eligibility requests.
Freddie Mac — Rate Survey
Weekly Primary Mortgage Market Survey, a benchmark for national
average mortgage rates.
FHFA — Loan Limits
Federal Housing Finance Agency conforming loan limits by county,
updated annually.
IRS — Mortgage Interest Deduction
IRS guidance on deducting home mortgage interest, points, and
eligible mortgage-related expenses.
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