FHA Loan Requirements — Everything You Need to Qualify

FHA loans accept lower credit scores than most conventional programs. The minimum depends on your down payment:

580 or higher: You qualify for the minimum 3.5% down payment. This is the most common FHA scenario.

500–579: You can still apply, but the required down payment rises to 10%. Lenders may also have stricter conditions.

Below 500: Not eligible for FHA financing. Focus on credit repair before applying.

Important: these are the FHA program minimums. Individual lenders (including HCMG) may have their own overlays — meaning their internal minimum may be slightly higher. Your loan officer will tell you the exact threshold for your file.

The FHA's 3.5% minimum down payment is one of its biggest attractions. On a $300,000 home, that's $10,500 — significantly less than the $15,000–$60,000 required by most conventional programs.

The down payment can come from your own savings, a gift from a family member, a down payment assistance grant, or a combination. Unlike some conventional loans, FHA allows 100% of the down payment to be gifted — as long as the gift is properly documented.

If your credit score is between 500 and 579, the minimum rises to 10%. In this case, down payment gift funds are still allowed.

Your debt-to-income ratio compares your monthly debt payments to your gross monthly income. FHA guidelines allow:

Front-end DTI (housing expenses only): up to 31% of gross income

Back-end DTI (all monthly debts): up to 43% of gross income

With compensating factors — strong reserves, a large down payment, or excellent credit — FHA can approve DTIs up to 50% or slightly higher through automated underwriting. Your loan officer will run your specific scenario.

FHA does not set a minimum income. What matters is that your income is sufficient to support the payment and is likely to continue.

You'll need two years of employment history. This doesn't have to be the same job — a history of stable employment in the same field qualifies. Self-employed borrowers need two years of tax returns showing consistent income.

Part-time income, overtime, bonus income, and rental income can all count, but lenders generally require a 2-year history of receiving it before it can be included in your qualifying income.

All FHA loans require mortgage insurance — this is how the FHA program funds itself. There are two components:

Upfront MIP (UFMIP): 1.75% of the loan amount, due at closing. It can be rolled into the loan balance instead of paid out of pocket.

Annual MIP: Ranges from 0.45% to 1.05% of the loan balance per year, divided into 12 monthly payments added to your mortgage payment.

For most FHA loans originated today with less than 10% down, the annual MIP lasts for the life of the loan. If you put 10% or more down, MIP cancels after 11 years.

This is the primary drawback of FHA vs. conventional financing. Once you build 20% equity, refinancing into a conventional loan eliminates MIP entirely.

The property you're buying must meet FHA standards. The most important rules:

It must be your primary residence — FHA is not available for investment properties or vacation homes.

The home must pass an FHA appraisal. The appraiser checks not only value but also safety and livability — things like peeling paint, broken windows, and structural issues can require repairs before the loan closes.

Condominiums must be on the FHA-approved condo list. Your loan officer can check this instantly.

Manufactured homes have additional requirements around permanent foundation and age.

The FHA sets county-level loan limits each year. For 2024, the baseline limit for a single-family home is $498,257 in most of the country, rising to $1,149,825 in high-cost areas like Los Angeles, San Francisco, and parts of Maryland and Virginia.

If the home you want exceeds the FHA limit in your county, you'll need a conventional or jumbo loan instead. Your loan officer can pull the exact limit for any zip code.