Last Updated: February 2026

Meeting FHA loan requirements is the first step toward qualifying for one of the most accessible mortgage loan programs in the United States. The Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD), sets specific eligibility guidelines for credit scores, down payments, income verification, debt-to-income ratios, and property standards that every borrower must satisfy when buying a home with an FHA home loan.

FHA loans offer a down payment as low as 3.5% and are designed to help first-time homebuyers and those with a lower credit score achieve homeownership. This guide walks through every FHA loan requirement in detail, so you know exactly what you need before applying. Whether you are a first-time homebuyer with limited credit history or a repeat buyer looking for flexible qualification criteria, understanding these FHA mortgage requirements will help you prepare a strong application. FHA mortgages remain among the most popular options for borrowers who want to buy a home with a low down payment and monthly payments they can afford. The FHA does not lend money directly — it insures the loan, which allows FHA-approved lenders to offer more generous terms.

FHA Loan Requirements at a Glance

Before diving into the details, here is a summary of the core FHA loan requirements for 2026:

FHA Credit Score Requirements

Your credit score is the single most important factor in FHA loan eligibility. The FHA uses a tiered system that links your credit score to the minimum down payment required:

Credit Score Tiers for FHA Loans

580 or Higher: This is the threshold for the standard FHA loan with the minimum 3.5% down payment. A score of 580 qualifies you for the most favorable FHA terms. Most FHA-approved lenders are comfortable approving borrowers in this range.

500 to 579: You can still get an FHA loan, but you must put at least 10% down instead of 3.5%. Fewer lenders originate FHA loans in this credit score range, so you may need to shop around more extensively.

Below 500: You do not qualify for an FHA loan at any down payment level. Focus on improving your credit before applying for an FHA loan or consider other home loan options.

Understanding how the FHA program evaluates credit is essential. FHA loans offer a payment as low as 3.5% down for borrowers with a 580+ score, making them ideal for first-time homebuyers and anyone buying a home with a lower credit score.

Which Credit Score Does FHA Use?

FHA lenders pull credit reports from all three major bureaus — Equifax, Experian, and TransUnion. If you have scores from all three, the lender uses the middle score. For joint applications with two borrowers, each person's middle score is evaluated, and the lender uses the lower of the two middle scores for qualification purposes.

Lender Overlays on Credit Scores

While the FHA allows scores as low as 500, many lenders impose their own minimum credit score requirements — called "lender overlays." A loan officer can help you understand your specific lender's requirements. Common lender overlays include:

• Some large banks require a minimum score of 620 or 640 for FHA loans
• Credit unions and mortgage brokers may accept scores closer to the FHA minimum of 580
• Non-QM and specialty lenders may work with borrowers in the 500-579 range

If one lender denies your FHA application due to credit score, another lender with different overlays may approve you. Always compare multiple FHA-approved lenders.

How to Improve Your Credit Score for FHA Approval

If your credit score falls short of FHA requirements, these strategies can help:

1. Pay down credit card balances: Reducing your credit utilization below 30% can boost your score by 20-50 points within 30-60 days
2. Dispute errors on your credit report: Inaccurate late payments, wrong balances, or accounts that do not belong to you can drag down your score
3. Avoid opening new credit accounts: Each new credit inquiry can temporarily lower your score by 5-10 points
4. Become an authorized user: Being added to a family member's credit card with a long, positive history can boost your score
5. Make all payments on time: Payment history accounts for 35% of your FICO score
6. Do not close old accounts: Length of credit history helps your score

FHA Down Payment Requirements

The FHA down payment is one of the lowest available in the mortgage market. Here is what you need to know:

Minimum Down Payment by Credit Score

• 3.5% down payment: Required with a credit score of 580 or higher. On a $300,000 home, that is $10,500.
• 10% down payment: Required with a credit score between 500 and 579. On a $300,000 home, that is $30,000.

Acceptable Sources of Down Payment Funds

FHA loans are generous about where your down payment funds can come from. Acceptable sources include:

• Personal savings: Checking accounts, savings accounts, or money market funds
• Gift funds: From family members, employers, labor unions, or charitable organizations (a gift letter is required)
• Down payment assistance programs: State and local government grants, forgivable loans, and matched savings programs
• Employer assistance: Some employers offer down payment grants or loans as employee benefits
• Sale of personal property: Documented proceeds from selling a car, jewelry, or other assets
• Retirement accounts: Withdrawals from 401(k) or IRA accounts (subject to tax implications)

Importantly, your FHA down payment cannot come from the home seller, the real estate agent, or any party with a financial interest in the transaction.

FHA Debt-to-Income Ratio Requirements

Your debt-to-income (DTI) ratio measures how much of your gross monthly income goes toward paying debts. FHA loans use two DTI calculations:

Front-End DTI (Housing Ratio)

The front-end ratio measures your total monthly housing costs as a percentage of gross monthly income. Housing costs include:

• Principal and interest on the FHA mortgage
• Property taxes
• Homeowner's insurance
• FHA mortgage insurance premium (MIP)
• HOA fees (if applicable)

FHA guideline: Maximum 31% front-end DTI

Back-End DTI (Total Debt Ratio)

The back-end ratio includes all monthly debt payments plus housing costs:

• Housing costs (from front-end calculation)
• Car payments
• Student loan payments
• Credit card minimum payments
• Personal loans
• Child support or alimony
• Any other recurring debt obligations

FHA guideline: Maximum 43% back-end DTI

DTI Exceptions with Compensating Factors

The FHA allows higher DTI ratios — sometimes up to 50% or higher — when borrowers demonstrate compensating factors such as:

• Significant cash reserves: Three or more months of mortgage payments in liquid assets
• Minimal payment shock: New mortgage payment is similar to or less than current housing cost
• Residual income: Substantial income remaining after all debts and expenses
• Non-taxable income: Military housing allowances, Social Security benefits, or disability income (can be "grossed up" by 25%)
• Stable employment: Long tenure with current employer or industry

Many FHA loans approved through the FHA's automated underwriting system (TOTAL Scorecard) receive approvals with DTI ratios above 43%, sometimes reaching 50% or higher with strong compensating factors.

DTI Calculation Example

FHA Employment and Income Requirements

FHA lenders verify that you have the stable income necessary to make your mortgage payments. Here are the specific employment and income requirements:

Two-Year Employment History

FHA guidelines require a two-year employment history. This does not mean you must have been at the same job for two years. The FHA looks for a consistent two-year pattern of:

• Steady employment (job changes within the same industry are acceptable)
• Increasing or stable income over the period
• No unexplained gaps in employment longer than one month

Employment gaps must be explained in writing. Acceptable reasons include returning to school, medical leave, seasonal employment, or relocation.

Income Documentation for W-2 Employees

• Most recent two years of W-2 forms
• Most recent 30 days of pay stubs
• Federal tax returns (if income varies or includes bonuses/commissions)
• Written verification of employment (VOE) from your employer

Income Documentation for Self-Employed Borrowers

Self-employed FHA borrowers face additional documentation requirements. The FHA loan program provides flexibility for self-employed individuals who want to use an FHA loan to buy a home with an FHA loan, but documentation must be thorough:

• Two years of personal and business tax returns (all schedules)
• Year-to-date profit and loss statement
• Business bank statements (if needed)
• Business license or CPA letter confirming the business is active

For self-employed FHA borrowers, the FHA uses a two-year average of net self-employment income. The loan term and loan amount will determine how much income documentation is needed. If income is declining year over year, the lender may use the lower year's income or deny the application.

Non-Traditional Income Sources

The FHA allows several non-traditional income sources to help qualify:

• Rental income: If buying a multi-unit property, 75% of anticipated rental income from non-owner-occupied units can be counted
• Social Security and pension income: Fully accepted; can be grossed up by 25% if non-taxable
• Disability income: Accepted with documentation that it will continue for at least three years
• Child support and alimony: Accepted if documented and expected to continue for at least three years
• Part-time and overtime income: Accepted with a two-year history showing consistency

FHA Property Requirements

FHA loans have strict property requirements that go beyond what conventional loans require. The home must meet HUD's Minimum Property Requirements (MPRs) and Minimum Property Standards (MPS).

Eligible Property Types

• Single-family homes: Detached houses, townhouses, and row homes
• Multi-family properties: Duplexes (2-unit), triplexes (3-unit), and four-plexes (4-unit) — borrower must occupy one unit
• Condominiums: Must be on the FHA-approved condo list or receive a single-unit approval
• Manufactured homes: Must be built after June 15, 1976, on a permanent foundation

Properties NOT Eligible for FHA Loans

• Investment properties (non-owner-occupied)
• Vacation or second homes
• Commercial properties
• Mobile homes without permanent foundations
• Homes built before 1976 that are manufactured (not stick-built)

FHA Minimum Property Standards

The FHA appraisal evaluates both the market value and physical condition of the property. Key minimum property standards include:

Structural Integrity

• Foundation must be sound with no significant cracks or settlement
• Walls must be structurally sound and free of major damage
• Floors must be level and in good condition
• No evidence of termite damage or wood-destroying organisms

Roofing

• Roof must have at least two years of estimated remaining life
• No active leaks or evidence of water damage
• Three or fewer layers of roofing material

Utilities and Systems

• Working heating system adequate for the climate
• Functioning plumbing with hot and cold running water
• Adequate electrical service (minimum 60 amps for existing homes)
• Safe and adequate water supply and sewage disposal

Safety and Health

• No peeling or chipping lead-based paint (homes built before 1978)
• Adequate ventilation in all rooms
• Working smoke detectors on each floor
• Safe access to the property (functional driveway or walkway)
• No environmental hazards (proximity to hazardous waste sites, high-voltage lines, or airports)

Living Conditions

• Minimum one bedroom and one bathroom
• Functional kitchen with proper ventilation
• Adequate natural light and ventilation
• Handrails on any stairways with more than three risers

Common FHA Appraisal Issues

These are the most common issues that cause FHA appraisals to fail:

1. Peeling paint on homes built before 1978 (lead-based paint concern)
2. Roof damage or less than two years of remaining life
3. Missing handrails on interior or exterior stairs
4. Non-functional systems (heating, plumbing, electrical)
5. Water damage or mold in the basement or crawl space
6. Broken windows or missing window panes
7. Foundation issues such as significant cracks or settling

If the appraisal identifies issues, the seller must make repairs before the loan can close, or the deal must be renegotiated. This is one reason some sellers are hesitant to accept FHA offers.

FHA Mortgage Insurance Requirements

Every FHA loan requires mortgage insurance, paid in two forms:

Upfront Mortgage Insurance Premium (UFMIP)

A one-time premium of 1.75% of the base loan amount, charged at closing. Most borrowers finance this into the loan rather than paying it in cash. On a $300,000 FHA loan, the UFMIP is $5,250, increasing your loan balance to $305,250.

Annual Mortgage Insurance Premium (MIP)

An ongoing premium paid monthly as part of your mortgage payment. The most common rate for 30-year FHA loans with less than 5% equity is 0.55% of the outstanding loan balance per year. This works out to about $137/month on a $300,000 loan.

MIP Duration

• Less than 10% down payment: MIP lasts the life of the loan
• 10% or more down payment: MIP automatically drops off after 11 years

FHA Loan Documentation Checklist

Gather these documents before applying for your FHA loan to streamline the process:

Identity and Legal

• Government-issued photo ID (driver's license or passport)
• Social Security number
• Green card or work visa (non-US citizens)

Income and Employment

• Last 30 days of pay stubs
• W-2 forms from the last two years
• Federal tax returns from the last two years (all pages and schedules)
• Written verification of employment or offer letter (for new employment)
• 1099 forms (if applicable)
• Business tax returns (self-employed borrowers)
• Year-to-date profit and loss statement (self-employed)

Assets and Savings

• Bank statements from the last 60 days (all pages, all accounts)
• Retirement account statements
• Investment account statements
• Documentation for large deposits (any deposit exceeding 1% of the purchase price)
• Gift letter and donor bank statements (if using gift funds)

Debts and Obligations

• Current mortgage statement (if applicable)
• Divorce decree (if applicable)
• Child support or alimony documentation
• Bankruptcy discharge papers (if applicable)
• Landlord contact information for rental history verification

Property-Related

• Purchase contract (once under agreement)
• Homeowner's insurance quote
• Condo association documentation (if applicable)

FHA Requirements After Bankruptcy, Foreclosure, or Short Sale

The FHA allows borrowers to qualify sooner after major credit events compared to conventional loans:

Chapter 7 Bankruptcy

Waiting period: Two years from the discharge date. You must demonstrate re-established credit and no new derogatory items since the bankruptcy. Most lenders want to see at least 2-4 new trade lines reported for 12+ months.

Chapter 13 Bankruptcy

Waiting period: One year of on-time payments in the Chapter 13 repayment plan, with court approval. Alternatively, one year after discharge. The borrower must demonstrate financial responsibility since the filing.

Foreclosure

Waiting period: Three years from the date of the foreclosure sale. The borrower must show re-established credit and explain the circumstances that led to the foreclosure.

Short Sale or Deed-in-Lieu of Foreclosure

Waiting period: Three years from the date of the short sale or deed transfer. Same credit re-establishment requirements apply.

Extenuating Circumstances Exception

The FHA may reduce waiting periods when the borrower can document extenuating circumstances — events beyond their control, such as serious illness, death of a wage earner, or job loss during a recession. These exceptions require strong documentation and typically reduce the waiting period by one year.

FHA Loan Requirements for Non-US Citizens

You do not need to be a US citizen to qualify for an FHA home loan. The FHA program allows applications from non-citizens who can use an FHA loan to purchase a home with an FHA mortgage loan. The Department of Housing and Urban Development sets the eligibility criteria:

• Lawful permanent residents (green card holders): Full eligibility, same as US citizens
• Non-permanent resident aliens: Eligible if they have a valid work visa, Social Security number, and meet standard FHA requirements. The property must be a primary residence.

Undocumented immigrants are not eligible for FHA loans. DACA recipients' eligibility varies by lender and is subject to evolving HUD guidance.

FHA Requirements vs Conventional Loan Requirements

Common Reasons FHA Loan Applications Are Denied

Understanding why FHA loans get denied helps you avoid common pitfalls:

1. Credit score too low: Below lender overlay minimums or below 500
2. DTI ratio too high: Total debts exceed 43-50% of income without adequate compensating factors
3. Insufficient employment history: Less than two years of verifiable income or significant gaps
4. Undocumented deposits: Large deposits in bank statements that cannot be explained with a paper trail
5. Property fails FHA appraisal: Home does not meet minimum property standards
6. Outstanding federal debt: Delinquent student loans, tax liens, or other federal debts
7. Recent bankruptcy or foreclosure: Within the required waiting period
8. CAIVRS flag: Listed in HUD's Credit Alert Verification Reporting System for defaulting on a previous government loan
9. Identity verification issues: Discrepancies in Social Security number, name, or address
10. Undisclosed liabilities: Hidden debts discovered during underwriting

FHA Loan Requirements FAQs

What credit score do I need for an FHA loan?

You need a minimum credit score of 580 for an FHA loan with 3.5% down payment. Scores between 500 and 579 require at least 10% down. Most FHA-approved lenders prefer a score of 620 or higher for easier approval.

How much is FHA mortgage insurance?

FHA mortgage insurance includes an upfront premium (UFMIP) of 1.75% of the loan amount and an annual premium (MIP) of 0.55% paid monthly. For a $300,000 loan, that means $5,250 upfront and about $137 per month.

How long do you have to live in an FHA home before selling?

FHA requires the home to be your primary residence for at least 12 months after closing. Selling within 90 days of purchase triggers FHA anti-flipping rules that may prevent a new FHA buyer from purchasing the property.

Can I qualify for an FHA loan with collections or charge-offs?

Yes. The FHA does not require collections or charge-offs to be paid before approval. However, if your total unpaid collection accounts exceed $2,000, the lender must either include 5% of the outstanding balance as a monthly debt in your DTI calculation or verify that you have a payment plan and include the actual payment amount.

Do FHA loans require a home inspection?

The FHA does not require a formal home inspection — only an FHA appraisal. However, the appraisal is not a substitute for a thorough home inspection. Buyers are strongly encouraged to get a separate home inspection to identify issues the appraisal may miss. The inspection is for the buyer's protection; the appraisal is for the lender's.

Can I use rental income to qualify for an FHA loan?

If you are purchasing a multi-unit property (2-4 units), 75% of the projected rental income from the units you will not occupy can be used to help qualify. You will need signed leases or a market rent analysis from the appraiser to document the expected rental income.

What is the maximum FHA loan amount I can get?

FHA loan limits depend on your county. The 2026 floor is $541,287 for low-cost areas, and the ceiling is $1,249,125 for high-cost areas. Check with HUD's website or your lender to find the specific limit for your county.

Can I get an FHA loan for a condo?

Yes, but the condo must be on the FHA-approved condominium list, or the individual unit must receive a single-unit approval. The condo association must meet FHA requirements including adequate reserves, sufficient owner-occupancy ratios, and appropriate insurance coverage.

Is there an income limit for FHA loans?

No. Unlike some first-time homebuyer programs, FHA loans have no maximum income limit. Borrowers at any income level can apply for an FHA loan as long as they meet the standard credit, DTI, and property requirements.

Summary: Complete FHA Loan Requirements Checklist

To qualify for an FHA loan in 2026, you need:

• Credit score of 580+ (3.5% down) or 500-579 (10% down)
• Debt-to-income ratio under 43% (higher with compensating factors)
• Two-year employment history with verifiable income
• Down payment from acceptable sources (savings, gifts, or assistance programs)
• Primary residence that meets FHA minimum property standards
• No delinquent federal debts or recent foreclosure/bankruptcy within waiting periods
• Willingness to pay mortgage insurance (1.75% upfront + 0.55% annual)

FHA loans remain one of the most borrower-friendly mortgage programs available. If you meet these requirements, you are well on your way to homeownership.