FHA Loans

Government-backed loans with low down payment options

FHA loans are mortgages insured by the Federal Housing Administration, designed to help first-time homebuyers and those with less-than-perfect credit achieve homeownership. These loans feature lower down payment requirements and more flexible qualification criteria than conventional loans, making them an excellent option for many borrowers.

Min Down Payment

3.5%

Min Credit Score

580

Max DTI Ratio

57%

MIP Required

Yes

Benefits

  • Down payments as low as 3.5% with credit score of 580+
  • More lenient credit requirements than conventional loans
  • Gift funds can be used for down payment and closing costs
  • Higher debt-to-income ratios accepted (up to 57% in some cases)
  • Can finance up to 96.5% of the home value
  • Available for 1-4 unit properties (live in one unit)
  • Assumable loans (buyer can take over your mortgage)
  • Can include renovation costs with FHA 203(k) loans

Requirements

  • Minimum credit score of 500 (3.5% down requires 580+)
  • Down payment of at least 3.5% (10% if credit score 500-579)
  • Mortgage insurance premium (MIP) required
  • Property must be primary residence
  • Steady employment history (typically 2 years)
  • Debt-to-income ratio typically below 43% (up to 57% with compensating factors)
  • Property must meet FHA appraisal standards

Frequently Asked Questions

What is mortgage insurance premium (MIP)?

MIP is insurance that protects the lender if you default on your loan. FHA loans require both an upfront MIP (1.75% of loan amount) that can be financed into the loan, and an annual MIP (0.15% to 0.75%) paid monthly.

Can I remove MIP from my FHA loan?

For loans originated after June 2013, if you put down less than 10%, MIP remains for the life of the loan. With 10% or more down, MIP can be removed after 11 years. Many borrowers refinance to a conventional loan to eliminate MIP.

What is an FHA 203(k) loan?

An FHA 203(k) loan allows you to finance both the purchase of a home and the cost of repairs or renovations in a single mortgage. This is perfect for buying fixer-uppers or updating your home.

Are there FHA loan limits?

Yes, FHA loan limits vary by county and are based on local home prices. For 2024, limits range from $498,257 in low-cost areas to $1,149,825 in high-cost areas.

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