FHA Loan
The mortgage built for first-time homebuyers with lower credit or less cash down.
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Everything you need to know about the FHA Loan in under 3 minutes
What is the FHA Loan?
What are the benefits?
- Low down payment. Put down as little as 3.5% if your credit score is 580 or higher.
- Flexible credit requirements. Scores as low as 500 can qualify — far below what most conventional loans accept.
- Competitive interest rates. Government backing keeps rates lower than many people expect, even for borrowers with imperfect credit.
- Higher DTI tolerance. Debt-to-income ratios up to 43% (and up to 50% with compensating factors) give more financial breathing room than conventional loans.
- Covers multiple property types. Eligible for single-family homes, condos, 2–4 unit properties, and some manufactured homes.
What are the requirements?
- Credit score of 580+ for 3.5% down; 500–579 requires 10% down
- Minimum down payment of 3.5% (can be from gift funds with a signed gift letter)
- Debt-to-income (DTI) ratio of 43% or lower (up to 50% with compensating factors)
- Two years of steady employment history, verified with pay stubs, W-2s, or tax returns
- Property must be your primary residence — not a vacation home or investment property
- Home must pass an FHA appraisal meeting HUD health and safety standards
- Upfront mortgage insurance premium (MIP) of 1.75% of the loan amount, plus annual MIP paid monthly
- Loan amount within 2026 limits: $541,287 (most areas) to $1,249,125 (high-cost areas)
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Frequently Asked Questions
- How is an FHA loan different from a conventional loan?
The biggest difference is who’s backing the loan. FHA loans are insured by the federal government, which lets lenders offer them to borrowers with lower credit scores and smaller down payments. Conventional loans aren’t government-backed, so they typically require higher credit scores (usually 620+), larger down payments, and stricter debt-to-income limits.
- Do I have to pay mortgage insurance forever?
It depends on your down payment. If you put down less than 10%, you pay the annual mortgage insurance premium (MIP) for the life of the loan. If you put down 10% or more, MIP falls off after 11 years. The only way to eliminate MIP earlier is to refinance into a conventional loan once you’ve built enough equity.
- What are the FHA loan limits in 2026?
FHA loan limits vary by location. For 2026, the floor (most U.S. counties) is $541,287 for a single-family home, and the ceiling (high-cost markets like Los Angeles, San Francisco, and New York) is $1,249,125. Limits are higher for 2–4 unit properties. You can look up your county’s exact limit at HUD’s official mortgage limits page.
- Can I use an FHA loan if I've had credit problems in the past?
Yes — that’s one of the program’s core purposes. Borrowers recovering from bankruptcy, collections, or past foreclosures can still qualify, though waiting periods apply. For example, most lenders require at least two years after a bankruptcy discharge and three years after a foreclosure before approving a new FHA loan.
- Can I use an FHA loan to buy a multi-family property?
Yes. FHA loans can be used to purchase 1–4 unit properties, as long as you live in one of the units as your primary residence. This makes FHA a popular strategy for “house hacking” — buying a duplex or triplex, living in one unit, and using rental income from the others to help cover your mortgage payment.
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