FHA Loans

Government-backed home loans with just 3.5% down and flexible credit requirements starting at 580.

What Is an FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration. Because the government guarantees a portion of the loan, lenders can offer lower down payments, lower credit score requirements, and more flexible qualification guidelines than conventional mortgages. FHA loans are the most popular loan type for first-time homebuyers in the United States.

With just 3.5% down and a minimum credit score of 580, FHA loans open the door to homeownership for borrowers who might not qualify for conventional financing. If your score is between 500 and 579, you can still qualify with 10% down.

What most people get wrong: FHA loans are not just for first-time buyers. Anyone can use an FHA loan as long as the property is your primary residence. Repeat buyers, people rebuilding after bankruptcy or foreclosure, and borrowers with higher debt ratios all use FHA.

Who FHA Loans Are For

  • First-time homebuyers who need a low down payment option
  • Borrowers with lower credit scores (580+ for 3.5% down, 500+ for 10% down)
  • Buyers with higher debt-to-income ratios — FHA allows up to 56.9% DTI with compensating factors
  • Borrowers recovering from bankruptcy or foreclosure

Key Features

FHA loans offer 15-year and 30-year fixed-rate terms. Loan limits vary by county. FHA allows gift funds for the entire down payment and permits seller concessions up to 6% of the purchase price. The trade-off is mortgage insurance: an upfront premium of 1.75% plus an annual premium of 0.55% on most loans, which lasts the life of the loan for borrowers putting less than 10% down.

Quick Facts

  • Min Down Payment 3.5%
  • Min Credit Score 580 (500 w/10%)
  • Max DTI Up to 56.9%
  • Loan Terms 15 or 30 yr Fixed
  • Occupancy Primary Only
  • Gift Funds 100% Allowed
  • Seller Concessions Up to 6%

Best For

  • First-time homebuyers
  • Lower credit scores
  • Higher debt ratios
  • Post-bankruptcy buyers
  • Gift fund recipients
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FHA loan FAQ

What's the minimum credit score for an FHA loan?

580 for 3.5% down. 500-579 still qualifies but requires 10% down. Most lenders overlay their own minimums on top of FHA's — typically 580-620. We match you to lenders that overlay the lowest.

Can I use an FHA loan for a second home or investment property?

No. FHA is primary residence only. If you're buying a rental, look at DSCR. If you're flipping, look at fix-and-flip. If you're buying a vacation home you want to live in part of the year, you may qualify for a second-home conventional loan instead.

How long do I have to wait after bankruptcy or foreclosure to get an FHA loan?

Chapter 7 bankruptcy: 2 years from discharge. Chapter 13: 1 year of payments on the plan with trustee approval. Foreclosure: 3 years from sale date. These are FHA minimums — some lenders add overlays. We work with lenders that use the floor, not the ceiling.

What's the difference between FHA and conventional?

FHA is government-insured, accepts lower credit scores, allows higher DTI, and requires mortgage insurance for the life of the loan if you put less than 10% down. Conventional isn't government-insured, needs higher credit (usually 620+), lower DTI allowed, and PMI drops off once you hit 78% LTV. FHA rates are sometimes lower, sometimes not — depends on the day and the borrower. Run both.

Can I refinance my FHA loan later without an appraisal?

Yes — the FHA streamline refinance (FHA Streamline) lets you refinance an existing FHA loan with no appraisal, no income docs, and a reduced credit package. Rates must drop by at least 0.5% (or you're on a government HECM-to-HECM refi). We handle these routinely.

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