Benefits of FHA Loans
FHA loans offer several advantages that make homeownership more accessible.
Low Down Payment
FHA loans require as little as 3.5% down payment for borrowers with a credit score of 580 or higher, making it easier to get into a home with less money upfront.
Flexible Credit Requirements
FHA loans are more forgiving of lower credit scores and past credit issues, with minimum scores as low as 500 (with a 10% down payment) or 580 (with a 3.5% down payment).
Higher Debt-to-Income Ratios
FHA loans may allow for higher debt-to-income ratios than conventional loans, helping borrowers who have other financial obligations qualify for a mortgage.
FHA Loan Options
Explore the different types of FHA loans available to meet your specific needs.
FHA Loan Requirements
While FHA loans have more flexible requirements than conventional loans, there are still certain criteria you'll need to meet to qualify.
- Credit Score: Minimum 580 for a 3.5% down payment, or 500-579 for a 10% down payment.
- Down Payment: At least 3.5% of the purchase price (with credit score of 580+) or 10% (with credit score of 500-579).
- Debt-to-Income Ratio: Typically 43% or less, though exceptions may be possible with compensating factors.
- Property Requirements: The home must be your primary residence and meet FHA minimum property standards.
- Mortgage Insurance: FHA loans require both an upfront mortgage insurance premium (UFMIP) and an annual mortgage insurance premium (MIP).
- Steady Employment: You'll need to document at least two years of steady employment and income.
Frequently Asked Questions
Find answers to common questions about FHA loans.
An FHA loan is a mortgage insured by the Federal Housing Administration, a government agency within the U.S. Department of Housing and Urban Development. FHA loans are designed to help borrowers with lower credit scores and smaller down payments purchase homes.
For FHA loans with a down payment of less than 10%, you'll pay mortgage insurance for the life of the loan. For loans with a down payment of 10% or more, you'll pay mortgage insurance for 11 years. If you want to eliminate mortgage insurance sooner, you can refinance to a conventional loan once you have 20% equity in your home.
FHA loans can be used to purchase single-family homes, 2-4 unit properties (as long as you live in one unit), condominiums in FHA-approved projects, and manufactured homes that meet certain requirements. The property must be your primary residence, not an investment property or second home.
Yes, but you'll need to wait a certain period. After Chapter 7 bankruptcy, the waiting period is generally 2 years from discharge. After Chapter 13 bankruptcy, you may qualify after 12 months of on-time payments. After foreclosure, the waiting period is typically 3 years. These waiting periods are shorter than those for conventional loans.