FHA loans are one of the most popular paths to homeownership for first-time buyers and anyone with a smaller down payment or less-than-perfect credit. Backed by the Federal Housing Administration, these loans have more flexible requirements than conventional mortgages. Here's exactly what you need to qualify in 2026 — and what it'll cost you.
1. Credit score requirements
FHA loans have two credit score tiers:
- 580 or higher — qualify with the minimum 3.5% down payment
- 500–579 — may still qualify, but you'll need 10% down
- Below 500 — generally not eligible for FHA financing
Keep in mind that individual lenders can set their own stricter minimums (called "overlays"). Many lenders want to see 620+ even for FHA, so shop around if your score is on the lower end.
2. Down payment
The headline benefit of FHA loans is the low down payment: just 3.5% of the purchase price for borrowers with a 580+ credit score. On a $350,000 home, that's $12,250 — compared to $70,000 for a 20% conventional down payment.
Your down payment can also come from gift funds from family, which is a major advantage for first-time buyers who haven't saved a large amount.
Good to know: Putting down 10% or more on an FHA loan changes your mortgage insurance timeline — it can drop off after 11 years instead of lasting the life of the loan. Our FHA calculator shows exactly when this happens.
3. Debt-to-income ratio (DTI)
Your DTI compares your monthly debt payments to your gross monthly income. FHA guidelines generally allow:
- Front-end ratio: up to 31% (housing costs alone)
- Back-end ratio: up to 43% (all monthly debts including the mortgage)
Strong compensating factors — like cash reserves or a high credit score — can push these limits higher with some lenders. Use our DTI calculator to check where you stand before applying.
See your full FHA payment
Our FHA calculator includes the upfront and annual MIP, with the real 11-year cancellation rule built in.
Open FHA Calculator4. Mortgage insurance premium (MIP)
Every FHA loan requires mortgage insurance, which protects the lender. This is the main trade-off for the low down payment. There are two parts:
- Upfront MIP: 1.75% of the loan amount, paid at closing (or rolled into the loan)
- Annual MIP: typically 0.15%–0.75% of the loan, paid monthly
Unlike conventional PMI, FHA annual MIP often lasts the entire life of the loan if your down payment is under 10%. This is the single most important thing to understand about FHA loans — and a key reason some buyers refinance to a conventional loan later once they have enough equity.
5. Property and loan limits
FHA loans can only be used for a primary residence you'll live in — not investment properties or second homes. The property must also meet FHA minimum property standards, verified by an FHA appraisal.
There are also FHA loan limits that vary by county and are adjusted annually. In lower-cost areas the limit is lower; in high-cost areas like parts of Florida, California, and the Northeast, the limit is significantly higher. Check your county's current FHA limit before house hunting.
FHA vs. conventional: which is right for you?
| Feature | FHA | Conventional |
|---|---|---|
| Min. down payment | 3.5% | 3–5% |
| Min. credit score | 580 | 620+ |
| Mortgage insurance | Life of loan (usually) | Cancels at 20% equity |
| Upfront insurance fee | 1.75% | None |
| Best for | Lower credit / small down | Good credit / 20% down |
Want to see the numbers side by side? Read our full conventional vs. FHA comparison, or run both through the calculator to compare real payments.
Bottom line: FHA loans open the door to homeownership with just 3.5% down and a 580 credit score — but the mortgage insurance is a real long-term cost. Run your exact numbers before deciding.