FHA Loans

Achieve homeownership with as little as 3.5% down

What is a FHA loan?

An FHA loan is a mortgage insured by the Federal Housing Administration. The government insurance protects the lender against loss, which lets lenders approve borrowers with lower credit scores, thinner savings, and higher debt loads than conventional guidelines allow. FHA is the most common path to homeownership for first-time buyers and anyone rebuilding credit.

Ideal for: First-time buyers, borrowers rebuilding credit after a hardship, and anyone whose down payment is limited but whose income comfortably supports the payment.

Key Benefits

  • Down payments as low as 3.5%
  • Credit scores accepted from 580 (500 with 10% down)
  • Flexible debt-to-income ratios, often to 50%+
  • Seller can contribute up to 6% toward closing costs
  • 100% of the down payment can be gift funds
  • Assumable by a future qualified buyer

    • How FHA Loans Work

    FHA insures, lenders lend

    The FHA does not lend money. It insures loans made by approved lenders, and you pay for that insurance through mortgage insurance premiums.

    Qualify with flexible credit

    3.5% down is available at a 580 score; 10% down can work between 500 and 579. Collections, past bankruptcies, and shorter job histories are treated more forgivingly than on conventional loans.

    Pay upfront and annual MIP

    An upfront premium of 1.75% is financed into the loan, plus an annual premium collected monthly. On most FHA loans with less than 10% down, that annual premium lasts the life of the loan.

    Refinance later to remove MIP

    Once you build roughly 20% equity and your credit improves, refinancing into a conventional loan is the standard way to drop FHA mortgage insurance.

    FHA Loans Requirements at a Glance

    Minimum credit score

    580 for 3.5% down; 500 for 10% down

    Minimum down payment

    3.5%

    Max debt-to-income

    43% standard, higher with compensating factors

    Mortgage insurance

    1.75% upfront + annual MIP

    Occupancy

    Primary residence only

    What it costs

    Closing costs run about 2%–5% of the price, plus the 1.75% upfront mortgage insurance premium, which is normally financed rather than paid in cash. Sellers may contribute up to 6% toward your closing costs, which is one of FHA's most useful features in a balanced market.

    Things to Consider

  • Upfront MIP of 1.75% is added to the loan balance
  • Annual MIP usually lasts the life of the loan below 10% down
  • The property must meet FHA minimum property standards
  • Loan limits are lower than conventional in high-cost counties

    • FHA Loans FAQs

    What is the minimum credit score for an FHA loan?

    580 for the 3.5% down program. Scores of 500–579 can qualify with 10% down, though many lenders set their own higher overlays.

    Does FHA mortgage insurance ever go away?

    With less than 10% down it stays for the life of the loan. Most borrowers remove it by refinancing into a conventional loan once they reach about 20% equity.

    Can I use an FHA loan for an investment property?

    No. FHA financing requires you to occupy the home as your primary residence, though 2–4 unit properties are allowed if you live in one unit.

    Do FHA loans take longer to close?

    Not materially. Appraisal requirements are stricter, so repairs flagged by the appraiser are the most common source of delay.

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