FHA loans are government-insured mortgages designed to help first-time buyers and those with less-than-perfect credit achieve homeownership with down payments as low as 3.5%.
FHA requires a minimum 500 credit score. With 580+, you qualify for 3.5% down. With 500-579, you'll need 10% down. Most lenders have overlays requiring 580-620+, but we work with investors serving the full FHA credit range.
FHA charges two types of mortgage insurance: an upfront premium (UFMIP) of 1.75% of the loan amount (usually financed into the loan), plus an annual premium of 0.55% for most loans, paid monthly. On a $300,000 loan, that's about $138/month for the annual MIP.
For loans with less than 10% down, MIP lasts for the life of the loan. With 10%+ down, MIP drops off after 11 years. The most common way to eliminate FHA MIP is to refinance into a conventional loan once you have 20% equity.
Standard FHA loans require the property to meet minimum safety standards. For homes needing significant repairs, consider FHA 203(k) renovation loans, which let you finance both the purchase and rehabilitation costs in one mortgage.
FHA guidelines allow up to 43% DTI standard, but automated underwriting can approve up to 50% or even 56.9% with strong compensating factors like high credit scores, significant reserves, or minimal payment increase from current housing payment.
Yes! FHA allows 100% of your down payment to come from gift funds from family members, employers, charitable organizations, or government programs. You'll need a gift letter and documentation showing the funds transferred to you.
FHA has shorter waiting periods than conventional loans. After Chapter 7 bankruptcy: 2 years. After Chapter 13: 1 year into repayment plan with court approval, or 2 years after discharge. After foreclosure: 3 years. Extenuating circumstances may shorten these periods.
Yes! FHA allows 2-4 unit properties if you occupy one unit as your primary residence. This is a great strategy to become a homeowner while rental income from other units helps qualify and pay your mortgage.
Some sellers worry about FHA's property requirements or appraisal process. FHA appraisals focus on health and safety issues that conventional appraisals might overlook. However, for homes in good condition, this rarely causes problems. Strong offers with solid pre-approvals help.
FHA Streamline is a simplified refinance for existing FHA borrowers. It requires minimal documentation—often no income verification, appraisal, or credit check. You must have made at least 6 payments and show a 'net tangible benefit' (usually lower payment or stable rate).
You must occupy the home as your primary residence within 60 days of closing and continue living there for at least one year. After one year, you can convert it to a rental and purchase another primary residence—even with another FHA loan in some cases.
FHA finances single-family homes, 2-4 unit properties (if owner-occupied), FHA-approved condos, manufactured homes on permanent foundations, and some modular homes. Co-ops are not eligible. The property must be your primary residence.
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Information provided is for educational purposes only and is not a commitment to lend. All loans subject to underwriting approval. Rates and terms subject to change. Equal Housing Lender. Equal Housing Opportunity.