An FHA loan is a mortgage insured by the Federal Housing Administration. The government does not lend the money, your lender does, but the FHA backstop lets lenders accept lower credit scores and smaller down payments than they would on a conventional loan.
FHA allows credit scores down to 580 with 3.5% down, or 500 with 10% down. DTI can stretch to 50% or higher with compensating factors. You pay an upfront mortgage insurance premium of 1.75% plus an annual premium for at least 11 years, often the life of the loan.
FHA tends to be the right tool for first-time buyers with thinner credit, recent credit events, or higher debt loads who would not qualify for conventional today.
| Minimum credit score | 580 with 3.5% down; 500 with 10% down |
|---|---|
| Minimum down payment | 3.5% (with 580+ score) |
| Debt-to-income (DTI) | Up to 50%+ with compensating factors |
| Mortgage insurance | 1.75% upfront + annual MIP; usually for life of loan |
| Loan limits (2026) | $524,225 single-family (most counties, 2026) |
| Property types | Primary residence only (1–4 units, owner-occupied) |
| Upfront fee | 1.75% UFMIP (typically rolled into loan) |
| Wait after bankruptcy / foreclosure | 2 years (Chapter 7) / 3 years (foreclosure) |
These calculators help you sanity-check what this program looks like for your actual situation:
Build the full PITI payment including FHA mortgage insurance.
See what price an FHA-eligible payment supports for you.
Check whether your debts fit the more flexible FHA DTI.
A guided walk through the qualifying picture in plain English.
Yes. FHA's published floor is 580 with 3.5% down, and a 600 score fits comfortably above it. Pricing is not as good as it would be at 680, but you should not be turned away for the score alone if the rest of the file looks reasonable.
For most FHA loans originated today, monthly mortgage insurance lasts the entire loan unless you put 10% or more down at closing, in which case it drops at year 11. The most common way to remove it earlier is to refinance into a conventional loan once you reach 20% equity.
Yes, as long as you live in one of the units as your primary residence. You can use a portion of the projected rental income from the other units to help you qualify. This is one of the most popular paths into small-multifamily ownership.
FHA appraisals check both value and condition. Peeling paint on older homes, missing handrails, and active roof leaks are the usual sticking points. Most are repairable before closing. Newer homes in good condition rarely have issues.
Yes. Most borrowers refinance to conventional once they hit 20% equity, which both ends the FHA insurance and often lowers the rate. You can also do an FHA streamline refinance to drop your rate without a full appraisal if you stay inside FHA.
Almost no one pays it in cash. The 1.75% UFMIP is rolled into the loan balance on virtually every FHA loan, so it does not affect the cash you bring to the table.
FHA tends to win when your credit is below about 660, when your DTI is above 45%, or when you had a credit event in the last few years. Above those thresholds, conventional usually beats FHA on total cost.
Still weighing the trade-offs? The FHA vs conventional decision guide walks through credit, down payment, mortgage insurance, and property rules side by side.
Start a no-pressure conversation about your scenario when you are ready. Educational only, never a sales pitch.
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