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

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.