FHA Loan Requirements for 2021

FHA loan requirements include minimum credit score and down payment amounts, as well as limits on the size of the loan and your total monthly debt load.

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FHA loan requirements

  • Credit score of at least 500.

  • Debt-to-income ratio of 50% or less.

  • 3.5% down payment if your credit score is 580 or higher.

  • 10% down payment if your credit score is 500-579.

  • The house must be your primary residence and must meet the FHA’s minimum property requirements.

The full list of FHA loan requirements is published in a handbook more than 1,000 pages long. You would need to drink at least a 20-ounce cup of coffee with a turbo shot just to stay awake through the first 20 pages. Good news: You don’t have to do that, because NerdWallet has summarized the Federal Housing Administration guidelines for you below.

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But first, let’s address a common misconception about who can get an FHA home loan.

Are FHA loans only for first-time home buyers?

No. Contrary to popular belief, FHA loans aren’t only for first-time home buyers. FHA loans typically have more relaxed qualification requirements than conventional mortgages. This makes FHA loans attractive to borrowers with lower credit scores or smaller down payments, common challenges for first-time home buyers.

But anyone, even a repeat buyer or a homeowner looking to refinance a mortgage, can use an FHA loan as long as they meet the eligibility requirements below.

FHA down payment: 3.5% minimum

With the FHA, the minimum down payment depends on your credit score. With a credit score of 580 or higher, the minimum down payment is 3.5%. With a score of 500 to 579, the minimum down payment is 10%.

FHA debt-to-income guidelines

Lenders pay attention to your debt-to-income ratio, regardless of the type of mortgage you get. The debt-to-income ratio, known as DTI, measures the percentage of your pretax income that you spend on monthly debt payments, including mortgage, credit cards, student loans and other obligations. You can use a debt-to-income ratio calculator to figure out where you stand.

The FHA requires a debt-to-income ratio of 50% or less, according to Brian Sullivan, public affairs specialist for the U.S. Department of Housing and Urban Development, which runs the FHA. DTI requirements may vary depending on your credit score and other factors.

FHA loan income requirements

There is no minimum or maximum salary you can earn that will qualify you for or prevent you from getting an FHA-insured mortgage. However, you must:

  • Have at least two established credit accounts. For example, a credit card and a car loan.

  • Not have delinquent federal debt or judgments, tax-related or otherwise, or debt associated with past FHA-insured mortgages.

  • Account for cash gifts that help with the down payment. These gifts must be verified in writing, signed and dated by the donor.

FHA documentation

Here is some of the documentation you will need when applying for an FHA home loan:

  • You must show proof of a Social Security number.

  • Provide original pay stubs, W-2 forms or valid tax returns, as necessary.

Of course, there are other stipulations, but an FHA-approved lender will walk you through the details if other requirements apply to you.

FHA property requirements

In addition to borrower qualifications, the property itself must meet certain requirements before you can qualify for an FHA mortgage.

  • The loan must be for a principal residence, and at least one borrower must occupy the property within 60 days of closing.

  • It can't be an investment property.

  • An FHA appraisal, which assesses the home's home and ensures it meets the FHA's minimum property standards.

  • The property can’t be a flip, meaning you can’t buy a house within 90 days of a prior sale.

  • You must take title to the property in your own name or in the name of a living trust at settlement.

» MORE: How FHA mortgage insurance works

FHA loan limits

The property must meet FHA loan limits, which vary by county. In 2021, that’s generally $356,362 for single-family homes in low-cost areas and $822,375 in high-cost areas.

» MORE: See today's FHA mortgage rates

FHA lenders have requirements, too

The FHA insures the loan, but a lender makes the final decision whether to hand over the money and can determine what specific qualifications it requires.

Those requirements can include a higher credit score, or a better debt-to-income ratio. It’s a good reason to shop more than one lender.

What if you don’t meet FHA requirements?

“FHA’s standard underwriting criteria is rolled up into a ‘scorecard’ that considers many factors related to income and debt,” Sullivan says. “Under certain conditions, particularly when a borrower doesn’t fit into our general score card requirements, a manual underwriting is required.”

That means if your situation doesn’t neatly fit within all the guidelines, a lender may still consider your loan application but will have to review it more closely before approving or denying it.