Loan Types • March 8, 2024 • 5 min read
FHA Loan Requirements and Benefits Explained
Everything you need to know about FHA loans, from eligibility requirements to benefits and mortgage insurance.
FHA Loan Requirements
Credit Score Requirements
- Minimum 580 credit score for 3.5% down payment
- Scores 500-579 require 10% down payment
- Recent bankruptcies or foreclosures may affect eligibility
- Late payments and collections are considered
Income and Employment
- Steady employment history (2+ years preferred)
- Verifiable income sources
- Debt-to-income ratio typically below 43%
- Multiple income sources may be considered
Property Requirements
- Must be your primary residence
- Property must meet FHA standards
- Home inspection required
- Property must be appraised by FHA-approved appraiser
Key Benefits of FHA Loans
Lower Down Payment
FHA loans require as little as 3.5% down, making homeownership more accessible.
Flexible Credit Requirements
More lenient credit score requirements compared to conventional loans.
Competitive Rates
Government backing often results in competitive interest rates.
Gift Funds Allowed
Down payment can come from gifts from family or approved sources.
Understanding FHA Mortgage Insurance
Upfront MIP
1.75% of the base loan amount, can be financed into the loan
Annual MIP
0.45% to 1.05% of the loan amount, paid monthly with mortgage payment
MIP Duration
Required for the life of the loan with less than 10% down payment
Ready to Explore FHA Loans?
Our mortgage experts can help you understand if an FHA loan is right for you.