- FHA mortgage insurance is required, but with a down payment of 10% or more, it can be canceled after 11 years.
- The property must undergo an FHA appraisal to meet government health and safety standards.
- If your credit score is 580 or higher, you can make a down payment as low as 3.5%.
- For credit scores between 500 and 579, the minimum down payment required is 10%.
- A debt-to-income ratio of 43% or below is ideal, but exceptions can be made.
FHA loans are available to anyone, but they’re especially popular with first-time home buyers thanks to their low down payment requirements and flexible credit and debt standards compared to conventional loans.
FHA loans: How they work
Although they’re called FHA loans — named for the Federal Housing Administration — the government agency doesn’t lend to borrowers. Instead, the FHA insures the loans made by FHA-approved private lenders, such as banks and credit unions. Some online mortgage lenders also offer FHA loans. By insuring these mortgages, the FHA helps reduce lenders’ risk of losses if an FHA loan borrower defaults.
Because FHA loans are designed to help low- to middle-income buyers afford a home, the FHA sets minimum requirements and other eligibility rules. However, FHA-approved lenders are free to set their own standards, such as requiring a higher credit score. This is one of the reasons it's smart to shop multiple FHA lenders. Each one might have different qualifications, and you can weigh rates and fees.
Here's a rundown of the key FHA loan requirements.
NERDY EXPERT
Gabi Wiartalla | VP of Outside Sales at NextDoor Lending, a wholly owned subsidiary of NerdWallet
“ FHA is definitely better for lower-credit-score borrowers or borrowers who have a high debt-to-income ratio... If you have a lower credit score and you're putting a decent amount down, or even a small amount, can you get a conventional? Yeah, but your [mortgage insurance] is going to be through the roof. ”
FHA minimum credit score: 500
Borrowers can qualify for FHA loans with credit scores lower than most conventional loans allow, which is one reason first-time home buyers are often attracted to them. The FHA lets borrowers with credit scores as low as 500 be considered for home loans. That said, FHA lenders often minimize their risk by mandating higher credit minimums.
Even a lender following FHA guidelines to the letter will offer better terms (like a lower down payment and more allowance for existing debt) if you have a higher credit score. A stronger credit score should also help you get a better FHA mortgage rate.
» MORE: Ways to build credit fast
Is an FHA loan the best choice when you have bad credit?
FHA minimum down payment: 3.5%
With an FHA loan, the minimum down payment depends on your credit score. If you have a credit score that's 580 or higher, the minimum down payment is 3.5%.
If your score falls between 500 and 579, the minimum down payment required is 10%. FHA guidelines sometimes refer to this as the minimum required investment, or the MRI.
» MORE: FHA loan down payment details
FHA debt-to-income ratio: Typically 43% or less
Your debt-to-income (DTI) ratio measures the percentage of pretax monthly income that you spend on your total monthly debt payments, including your mortgage or rent, credit cards, student loans and other obligations. Also referred to as “back-end” DTI, lenders closely evaluate this metric, regardless of the type of mortgage you’re applying for.
The FHA's guidelines for maximum DTI vary depending on your credit score. They also consider other aspects of your financial picture, such as how much cash you have on hand.
Use our debt-to-income ratio calculator to figure out where you stand. Lenders prefer to see a lower DTI percentage because it means you’re more likely to be able to afford a loan and make payments on time.
DTI examples
Gross monthly income | Total monthly debt | DTI | What it means |
|---|---|---|---|
$6,000 | $1,500 | 25% | Low: strong borrowing capacity |
$6,000 | $1,860 | 31% | Moderate: acceptable to most lenders |
$6,000 | $2,580 | 43% | High: on the maximum DTI cusp for many loans |
$6,000 | $3,000+ | 50%+ | Very high: lender will require compensating factors for loan approval |
FHA front-end debt ratio: Typically 31% or less
The FHA also looks at your “front-end” debt ratio. You might see this referred to as your PTI, or payment-to-income. This ratio reflects your projected monthly mortgage payment to your monthly income.
» MORE: How your debt-to-income ratio affects your mortgage
FHA loan income requirements
There is no minimum or maximum salary that will qualify you for or prevent you from getting an FHA-insured mortgage. However, you must:
Confirm income: Show an income history of at least two years through employment verification or proof of enrollment in school or the military.
Demonstrate credit: Have a credit history, most commonly through a traditional credit score. If you don’t have a credit score, you’ll need to demonstrate a history of paying at least three types of bills on time, such as rent or utilities.
Clear debt: Not have delinquent federal debt or judgments, tax-related or otherwise, or debt associated with past FHA-insured mortgages.
Document gifts: Account for cash gifts that help with the down payment. That can include money from a friend or family member, a charity, your employer or union, or from a government agency. These gifts must be verified in writing, signed and dated by the donor.
FHA loan limits: $541,287 (floor) to $1,249,125 (ceiling)
The property must meet FHA loan limits, which vary by county. In 2026, that’s generally up to $541,287 for single-family homes in low-cost areas and up to $1,249,125 in high-cost areas.
Some counties have limits between these amounts. Visit HUD's website to look up the FHA loan limit in any county.
FHA documentation requirements
Here is some of the documentation you will need when applying for an FHA home loan:
Valid government-issued ID, such as a driver's license or passport.
Proof of a Social Security number.
Two years' worth of original pay stubs, W-2 forms or valid tax returns.
Signed and dated letters that detail the source and amount of any gift funds and explicitly state that you don't need to pay back the money.
An FHA-approved lender will walk you through the details of other documentation you might have to provide.
» MORE: How to apply for a mortgage
FHA inspection and property requirements
In addition to borrower qualifications, the property must meet certain requirements before you can qualify for an FHA mortgage:
The loan must be for a principal residence (not a vacation or second home).
At least one borrower must occupy the property within 60 days of closing and intend to continue occupying the home for at least one year.
The property can be a single-family home (detached or part of a development like a condo or townhouse), a multifamily home with up to four units so long as you occupy one or a manufactured home that's on a permanent foundation.
It can't be an investment property, with the exception of a multiunit dwelling where you live in one of the units.
Unless you are using a 203(k) loan for renovation, it must pass an FHA appraisal, which ensures the home meets the FHA's minimum property standards.
The property can’t be a house flip, meaning you can’t buy a home within 90 days of a prior sale. Some exceptions apply, such as if the prior owner inherited the home.
You must take title to the property in your own name or in the name of a living trust at settlement.
FHA mortgage insurance requirements: Upfront and monthly payments
Lenders are willing to offer FHA loans because they know that in the worst-case scenario, when they have to foreclose on a home, the FHA will pay them back. That's why you'll sometimes see the FHA described as insuring home loans.
That FHA backing is funded by you, the homeowner, via FHA mortgage insurance.
Upfront payment: You'll be required to make an upfront mortgage insurance premium equal to 1.75% of the loan amount at closing, though this can be rolled into the loan. After that, you'll make monthly mortgage insurance payments.
Monthly payments: If your down payment is 10% or more, you'll have to make monthly mortgage insurance payments for 11 years. But if you make a down payment of less than 10% on an FHA loan, you will continue to make monthly mortgage insurance payments for the life of your loan.
The amount of insurance you'll pay is calculated based on the length and total cost of your mortgage as well as the amount of your down payment.
» MORE: FHA closing costs
FHA foreclosure waiting period: Three years
If you have lost a home to foreclosure, you'll have to wait three years before applying for an FHA loan. There are some exceptions, however, for circumstances like a serious illness.
Those who have experienced bankruptcy can also qualify for an FHA loan, though you'll have to demonstrate you're on better financial footing. Some allowances may be made individually, but in general, you'll need to wait two years after a Chapter 7 bankruptcy and at least a year after a Chapter 13 bankruptcy to apply for an FHA mortgage.
» MORE: What to know about bankruptcy
FHA homeownership requirements
FHA loans are often attractive to borrowers with lower credit scores or smaller down payments because these loans typically have more relaxed qualification requirements than conventional mortgages. Credit challenges and saving for a down payment can be big hurdles for first-time home buyers.
If you are a first-time home buyer, you might be able to combine an FHA loan with down payment or closing cost assistance from state first-time home buyer programs. Because the FHA allows gift funds to cover those costs, one of these programs might help you more comfortably afford a home.
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.
» MORE: Comparing FHA vs. conventional loans
