Loan programs
FHA loans
Insured by the Federal Housing Administration, and built for buyers with some damage in their credit history. Easier to get into. More expensive to stay in.
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- Income
- Deposit
- Credit
At a glance
- Credit score580Or 500 with 10% down
- Down payment3.5%With a qualifying score
- Mortgage insuranceMIP, upfront and annualOften lasts the life of the loan
- Debt-to-incomeMore flexibleHigher ratios possible with compensating factors
FHA in numbers
The thresholds that decide your file
Program floors set by HUD. Individual lenders often require more.
An FHA loan is insured by the Federal Housing Administration. The government is not lending you the money. It promises to cover the lender if you default. That is why lenders accept lower scores.
That insurance is what you pay for, and on most FHA loans it does not stop.
Loan program
FHA at a glance
Backed by the Federal Housing Administration
The requirements
What you need to qualify
| Requirement | Typical minimum | Worth knowing |
|---|---|---|
| Credit score | 580 at 3.5% down | 500 to 579 requires 10% down |
| Down payment | 3.5% | Can come from a documented gift |
| Debt-to-income | Around 43% | Higher is possible with compensating factors |
| Mortgage insurance | Upfront plus annual | Life of loan below 10% down |
| Property | Must meet FHA standards | Appraiser checks condition, not just value |
Scroll sideways to see all columns.
These are the lowest a program allows. Lenders often want more. That is called an overlay. Compare all five programs →
The detail
What makes this program different
The 500 to 579 band is real
Below 580 you can still qualify, but you need 10 percent down. Few lenders write these, so you may have to ask around.
MIP has two parts
One premium is added to your loan up front. Another is split across your monthly payments. Put down less than 10 percent and it lasts the life of the loan.
Refinancing out is the standard exit
Most FHA borrowers switch to a conventional loan once their credit and equity allow. That is when the insurance stops. Plan for it.
The appraisal has condition standards
FHA appraisers check the house meets minimum standards. Peeling paint, missing handrails, systems that do not work. On a fixer-upper that can complicate an offer.
Find out where you actually land
There is no credit inquiry, so checking costs you nothing.
See what I qualify for
Honestly
Is an FHA loan right for you?
Good fit if
- Your credit score sits below 620
- You have a recent blemish that conventional lenders will not look past
- Your down payment is coming largely from a family gift
- Your debt-to-income ratio is higher than conventional allows
Look elsewhere if
- Your score clears 620 comfortably, where conventional costs less
- You qualify for VA, which has no monthly insurance at all
- You are buying a property in poor condition
- You plan to hold the loan for decades and want the insurance to end
Being honest
When an FHA loan is the wrong choice
FHA gets people in the door. It is not always the cheaper door.
Your score clears 620 comfortably
At that point conventional usually costs less over time, because the mortgage insurance can be cancelled and FHA's generally cannot.
You are buying a property that needs work
FHA appraisals apply condition standards. Peeling paint, a failing roof or missing handrails can hold up the loan until they are fixed, and sellers know it.
You are eligible for VA
A VA loan allows zero down with no monthly mortgage insurance at all. For an eligible veteran it beats FHA on almost every measure.
You plan to stay a long time
With less than 10 percent down, FHA mortgage insurance runs for the life of the loan. Over twenty years that is a significant sum.
The exit
The standard way out of FHA mortgage insurance
Most FHA borrowers do not stay on FHA. They refinance to a conventional loan once their credit and equity allow, and that is when the insurance finally stops.
Two things have to line up. Your credit score needs to clear the conventional floor, usually around 620 and better if you want the pricing. And you need roughly 20 percent equity, which comes from paying down principal, from rising local values, or from both.
It is worth planning for from the start rather than discovering it years in. How refinancing works, including how to calculate whether it pays.
- 1Your credit clears the conventional floorUsually around 620, and better if you want the pricing.
- 2You reach roughly 20 percent equityFrom paying down principal, from rising values, or both.
- 3You refinance to conventionalThat is when the insurance finally stops.
Questions
Common questions
What credit score do you need for an FHA loan?
580 with 3.5 percent down, or between 500 and 579 with 10 percent down. Individual lenders often set higher floors than the FHA does, so a lender wanting 620 on an FHA loan is common.
How much is FHA mortgage insurance?
There is an upfront premium added to the loan balance, plus an annual premium collected monthly. The exact rates are set by HUD and change from time to time, so confirm current figures with a loan officer.
Does FHA mortgage insurance ever go away?
With less than 10 percent down it lasts the life of the loan. With 10 percent or more down it can end after eleven years. Most borrowers refinance into a conventional loan instead.
Can you get an FHA loan after bankruptcy?
Usually yes, after a waiting period that runs from the discharge date rather than the filing date. FHA waiting periods are generally shorter than conventional ones.
Is FHA only for first-time buyers?
No. Anyone who meets the requirements can use it, as long as the property will be your primary residence.
Keep reading
Related guides
Conventional loans
Higher bar to enter, cheaper over time.
How to qualify
The four factors lenders weigh together.
Mortgage readiness
Where you stand today, and what to fix.
Independent sources
- US Department of Housing and Urban Development — FHA program rules and mortgage insurance
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