FHA Loan Requirements in 2026
An FHA loan requires a minimum credit score of 580 for a 3.5% down payment, or 500 to 579 for a 10% down payment, per HUD guidelines. The loan must be for a primary residence, and the property must meet FHA minimum property standards. FHA loans require mortgage insurance premium (MIP): an upfront premium of 1.75% of the loan amount plus an annual premium paid monthly. MIP lasts the life of the loan when the down payment is less than 10%.
Key facts
- Minimum credit score
- 580 (3.5% down) or 500 (10% down)
- Minimum down payment
- 3.5% with 580+ credit
- Maximum DTI
- 50% (31% housing preferred)
- Upfront MIP
- 1.75% of loan amount
| Requirement | Standard |
|---|---|
| Minimum credit score | 580 (3.5% down) / 500 (10% down) |
| Minimum down payment | 3.5% with 580+ credit |
| Maximum DTI | 50% (front-end 31% preferred) |
| Upfront MIP | 1.75% of loan amount (financeable) |
| Annual MIP | 0.15% to 0.75% depending on LTV and term |
| Occupancy | Primary residence only |
| Property standards | Must meet FHA minimum property requirements |
| Loan limits (2025) | $498,257 most areas / $1,149,825 high-cost |
Source: HUD FHA guidelines, 2025
Who Qualifies for an FHA Loan?
FHA loans are open to any owner-occupant who meets the credit, income, and property standards. There is no first-time buyer requirement. Repeat buyers, divorce buyers rebuilding credit, and households recovering from a past financial event all use the program regularly.
The borrower must occupy the home as a primary residence within 60 days of closing. Investment properties and second homes are not eligible. Co-borrowers who will not live in the home (a non-occupant co-borrower) are allowed in many cases and can help with DTI.
FHA Credit Score and Down Payment Requirements
FHA publishes a two-tier minimum. A credit score of 580 or higher unlocks the headline 3.5% down payment. A score between 500 and 579 still qualifies, but the down payment jumps to 10%.
Most lenders apply an overlay above the HUD floor. A typical lender overlay puts the practical minimum at 580 to 620 even though HUD allows lower. Shop two or three FHA lenders if you are at the low end of the range.
FHA Mortgage Insurance Premium (MIP): What It Costs and How Long It Lasts
FHA mortgage insurance has two parts. The upfront MIP is 1.75% of the loan amount, paid at closing or financed into the loan. The annual MIP runs 0.15% to 0.75% depending on loan term and LTV, billed monthly.
On a 30-year FHA loan with less than 10% down, MIP lasts the life of the loan. To drop MIP without refinancing, you need to put 10% or more down at origination, in which case MIP cancels after 11 years. Most FHA borrowers who later cross 20% equity refinance into a conventional loan to escape MIP.
FHA Debt-to-Income (DTI) Limits
FHA allows higher DTI than conventional financing. The standard cap is 43%, with extensions up to 50% allowed when the file has compensating factors such as cash reserves, a higher credit score, or substantial residual income.
FHA also evaluates the front-end (housing) ratio. The preferred housing-only ratio is 31%. Files above that can still be approved, but the automated underwriting engine looks harder at offsetting strengths.
FHA Loan Limits by Area in 2025
FHA loan limits are tied to the conforming loan limit and reset every year. For 2025, the floor in most counties is $498,257 for a single-family home. The ceiling in high-cost counties is $1,149,825. Alaska, Hawaii, Guam, and the U.S. Virgin Islands have a higher cap.
Limits scale up for 2, 3, and 4-unit properties. An owner-occupied FHA borrower can finance up to a 4-unit building (one of which they must occupy) and use the rental income from the other units to qualify.
FHA Property Requirements: What Homes Qualify?
FHA appraisers verify the property meets HUD's Minimum Property Requirements. The home must be safe, sound, and secure: working systems, no exposed wiring, no peeling lead paint on pre-1978 homes, a functioning roof, and no major structural issues.
Properties that need significant repair often do not qualify for a standard FHA loan. For those, the FHA 203(k) renovation loan finances the purchase and the repairs in one mortgage.
FHA Loan vs. Conventional Loan: Which Is Better?
FHA is usually better for lower credit, lower down payment, and higher DTI. Conventional is usually better for stronger credit (700+) and 5% or more down because the mortgage insurance drops off faster and total monthly cost is often lower.
Run a side-by-side quote with both before deciding. The right answer depends on your specific credit, down payment, and how long you plan to stay in the home.
How to Apply for an FHA Loan
Apply with any FHA-approved lender. The application uses the same Form 1003 as a conventional loan. Bring 30 days of pay stubs, 2 years of W-2s, 2 years of federal tax returns, and 60 days of bank statements to the first call.
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Frequently asked
What credit score do you need for an FHA loan?
HUD allows a minimum of 580 for the 3.5% down payment FHA program, or 500 to 579 for the 10% down option. Most lenders apply an overlay around 580 to 620 in practice. Shop two or three FHA-approved lenders if you are near the floor.
Can you get an FHA loan with a 500 credit score?
Yes, but with a 10% down payment instead of the standard 3.5%. Many lenders also apply overlays that raise the practical minimum to 580 or above. If your score is in the 500 to 579 range, ask the lender directly whether they originate at that level.
How long does FHA mortgage insurance last?
On a 30-year FHA loan with less than 10% down, MIP lasts the life of the loan. With 10% or more down, MIP cancels after 11 years. Most borrowers who reach 20% equity refinance into a conventional loan to drop MIP entirely.
What is the FHA loan limit in 2025?
The 2025 FHA floor for a single-family home is $498,257 in most counties. The high-cost ceiling is $1,149,825. Limits scale up for multi-unit properties. Check your specific county on the HUD FHA mortgage limits lookup.
Can you use an FHA loan to buy a multi-family property?
Yes, up to 4 units, as long as you occupy one unit as your primary residence. The rental income from the other units can help you qualify, which makes FHA one of the most accessible paths into small multifamily ownership.
Is an FHA loan better than a conventional loan?
FHA is usually better for lower credit (below 680), lower down payment (under 5%), and higher DTI. Conventional is usually better for stronger credit and 5% or more down because the mortgage insurance drops off automatically and overall cost is lower over time.
FHA loan requirements are per HUD guidelines as of 2025 and subject to change. This article is for informational purposes only and not a commitment to lend. Encompass Lending Group, LP NMLS #292897. Equal Housing Opportunity.
