What Are The Qualifications For An FHA Loan?

In order to qualify for an FHA loan, you’ll need a minimum 3.5% down payment, a minimum FICO® Score of 580, a debt-to-income ratio (DTI) of no more than 50%, and a steady employment history.

FHA Loan

Q: Who Are FHA Loans Best For?

FHA home loans are a great option for people whose credit scores are 580 and higher, and who have at least a 3.5% down payment. These more lenient financial qualifications make FHA loans a popular option for first-time home buyers, though you don’t need to be a first-time buyer to qualify.

Q: How Do FHA Loans Work?

FHA mortgages are insured by the Federal Housing Administration (FHA). The FHA protects lenders against defaults on payments. This makes it easier for you to qualify and allows lenders to offer lower interest rates.

Get a mortgage with a lower credit score and smaller down payment.

What To Know About FHA Loans

Who Are FHA Loans Best For?

An FHA loan might be a good option for you if:

You have fair credit.
You want to make a smaller down payment.
You have a steady income and plan to live in the home you’re buying.

How Do FHA Loans Work?

FHA loans are insured by the Federal Housing Administration, allowing lenders to offer loans with more lenient financial requirements.
Borrowers must pay closing costs but can roll those fees into their loan amount. They also must pay an upfront and annual mortgage insurance premium.
Homes must pass an FHA-approved appraisal and meet minimum property standards.

How Do I Qualify For A 30-Year Fixed-Rate Loan?

Minimum 3.5% down payment with a credit score of at least 580
Minimum 10% down payment with a credit score of at least 500
A debt-to-income ratio below 57%, depending on the lender
Must pay closing costs, typically 2% to 5% of the purchase price

FHA Loan Benefits

Lower credit score requirements than other loans
Low down payment requirement
Available with a fixed or adjustable interest rate
Choose between a 30-year or 15-year loan
Can qualify after bankruptcy or other financial setbacks
Can roll closing costs into the loan
Can use an FHA Streamline to refinance with minimal documentation

FHA Property Requirements

The loan amount can’t exceed the limits in your area. You can go to the Department of Housing and Urban Development to look up the FHA loan limits in your area.
The home must meet the FHA’s minimum property standards for safety, security and structural integrity.
You’ll need to move in within 60 days of closing.
The property must be your primary residence. Investment properties and second homes don’t qualify for FHA loans.

Frequently Asked Questions

Here are answers to common questions about FHA loans.

Are FHA loans cheaper than conventional loans?

FHA loans are typically cheaper than conventional loans for borrowers with lower credit scores. A conventional loan is often cheaper if you have a credit score of at least 620.

Do I have to buy mortgage insurance for an FHA loan?

Yes, mortgage insurance is required for all FHA loans. However, if you make a down payment of at least 10%, you can stop paying the premiums after 11 years.

How much of a down payment will I need for an FHA loan?

If your credit score is at least 580, you’ll need a 3.5% down payment. If your credit score is between 500 and 579, you’ll need a 10% down payment.