Who FHA Loans Are Best For

This loan is a great option for people whose credit scores are 580 and higher and who have a 3.5% down payment. Read more about other benefits below.

How FHA Loans Work

These loans are insured by the Federal Housing Administration (FHA).

The FHA protects lenders against defaults on payments. This makes it easier for you to qualify and allows lenders to offer lower interest rates.

A minimum 3.5% down payment.
A minimum FICO® Score of 580.
A debt-to-income ratio (DTI) of no more than 50% and steady employment history. Estimate your DTI by adding your monthly debt payments (such as credit card and car payments) and dividing the total by your monthly income before taxes.
Money to cover the upfront mortgage insurance premium (UFMIP). The amount is usually equal to 1.75% of your loan amount.
Money to cover closing costs, which could be anywhere from 2% – 6% of the purchase price.

Credit score requirements are lower compared to other loans.
You could still qualify for an FHA loan if you’ve had a bankruptcy or other financial issues in the past.
They’re available with fixed or adjustable rates and for 30-year or 15-year terms.
They have low down payment requirements. You can put down as little as 3.5%.

Closing costs can be rolled into your loan.
If you’ve already got an FHA loan, you can refinance with an FHA Streamline. Less documentation is required for this option, and you may not need an appraisal. The FHA Streamline is a good option if you’re not looking to take cash out.

Your loan can’t exceed the loan amount limits in your area. The FHA's limit for lower-cost areas is set at $498,257 in 2024. In high-cost areas, the limit for 2024 is $1,149,825. Look up the loan limits in your area.
The home must meet the FHA’s minimum property standards for safety, security, and structural integrity.
When buying a home, you’ll need to move in within 60 days of closing.
It must be your primary residence. Investment properties and second homes don’t qualify for FHA loans.