FHA loan requirements: what HUD asks, and what your lender adds on top
An FHA loan is a private mortgage that HUD insures. That one fact explains every requirement below: the lender is protected against your default, so it can accept a credit profile a conventional lender would decline — and in exchange HUD dictates the down payment, the insurance, the paperwork and the condition of the house.
The borrower rules HUD publishes
They live in a single rulebook, the Single Family Housing Policy Handbook 4000.1, which HUD amends by mortgagee letter through the year. The headline requirements as of 2026:
| Requirement | What FHA allows |
|---|---|
| Credit score and down payment | 580 and above: 3.5% down (96.5% LTV). 500 to 579: 10% down. Below 500: not eligible. |
| Debt-to-income | 31% housing / 43% total is the manual underwriting guideline; higher ratios are possible when the TOTAL Scorecard returns an approval and the file documents compensating factors |
| Employment and income | A two-year history — not necessarily with one employer; gaps of a month or more explained in writing |
| Occupancy | Primary residence only, occupied within 60 days of closing; one to four units |
| Down payment source | Your own funds, or a 100% gift from family, an employer, a labor union, a charity or a government assistance program — with a documented paper trail |
| Federal debt | No delinquent federal debt; the file is screened through CAIVRS, and a defaulted federal student loan generally blocks the loan until it is resolved |
| Number of FHA loans | Generally one at a time, with narrow exceptions (job relocation, an increase in family size, leaving a jointly owned home) |
The gap between that table and reality is the lender overlay. HUD insures down to 500, but few retail lenders originate below 580 and many set their floor at 620, because HUD monitors their FHA default rates. In the 500s, the loan exists on paper and finding a lender who writes it is the actual work. Our guide to the credit score needed to buy a house covers what each band costs.
The mortgage insurance, in two pieces
Every FHA loan carries both:
- Upfront mortgage insurance premium (UFMIP) — 1.75% of the base loan amount, paid at closing or, in nearly every case, financed on top of the loan without counting against the loan-to-value limit.
- Annual MIP, billed monthly. For a 30-year loan with a base amount at or below the national conforming limit, the rate is commonly 0.55% a year above 95% LTV and 0.50% at 95% or below, following HUD's 2023 reduction. Larger balances and 15-year terms sit on different rows of the schedule, and the schedule itself is set by mortgagee letter — verify the current one before you budget.
What that looks like on a $300,000 purchase with the minimum 3.5% down:
- Base loan: $289,500 — UFMIP at 1.75%: about $5,066, financed, so the note is roughly $294,566
- Annual MIP at 0.55%: about $1,592 a year, or roughly $133 a month on top of principal, interest, taxes and insurance
- Total mortgage insurance paid over eleven years, before any refinance: on the order of $22,000 including the upfront premium
The duration rule is the part buyers miss. Put less than 10% down and the annual premium lasts the life of the loan — it does not fall off at 80% equity the way private mortgage insurance does. Put 10% or more down and it ends after 11 years. Most FHA borrowers escape it by refinancing into a conventional loan once they hold around 20% equity, which is a real plan but not a free one: budget the closing costs, and accept that the future rate is whatever the market offers. The mechanics of the alternative are in our guides to PMI for first-time buyers and FHA vs conventional.
2026 loan limits
FHA does not set its limits independently. They are pegged to the conforming loan limit that FHFA publishes each year — a floor of 65% and a ceiling of 150% of that figure, with counties in between set by local median prices. For case numbers assigned in calendar year 2026, on a one-unit property:
- Floor (most of the country): $541,287
- Ceiling (high-cost counties, and statewide in Alaska and Hawaii): $1,249,125 — 150% of the $832,750 conforming baseline
- Two-, three- and four-unit properties carry progressively higher limits in every county
Between the floor and the ceiling, the number is county-specific and HUD publishes a lookup. In an expensive metro the FHA limit is often the binding constraint on the whole strategy: above it, you are shopping conventional or jumbo regardless of your credit. Our state-by-state first-time buyer pages pair the local price level with the programs available there.
The house has to qualify too
This is where FHA files die that would have closed conventionally. An FHA appraisal is performed by an appraiser on HUD's roster, attached to the case number, and it does two jobs at once: it estimates value, and it verifies the minimum property requirements — safety, security and soundness. In practice that means the appraiser flags things a conventional appraiser would ignore: peeling paint on a home built before 1978, missing handrails on stairs of a few risers or more, a roof with little remaining life, water intrusion, an inoperable furnace or water heater, exposed wiring, utilities that were shut off on the day of the visit.
- Condos need to be in an FHA-approved project, or to qualify under the single-unit approval process, which caps how much of an unapproved building FHA will finance.
- Manufactured homes must be on a permanent foundation, titled as real property, and carry their HUD certification labels.
- Three- and four-unit properties must pass the self-sufficiency test — net rental income covering the full payment — described in our guide to financing a duplex, triplex or fourplex.
- Recently flipped houses run into HUD's property resale restrictions, which generally make a home ineligible for FHA insurance when it is resold within 90 days of the seller's acquisition, with extra documentation between 91 and 180 days on sharp price increases.
A flagged item is not automatically fatal. The usual outcomes are a seller repair before closing, an escrow holdback where the lender permits one, or a switch to a loan program with a lighter touch on condition. What you cannot do is talk the appraiser out of it.
After a bankruptcy, foreclosure or short sale
FHA's waiting periods are the shortest of the major programs, which is much of its appeal:
- Chapter 7 bankruptcy — generally two years from the discharge date, with re-established credit.
- Chapter 13 — often possible after twelve months of on-time plan payments, with the bankruptcy court's written permission to take on the debt.
- Foreclosure — generally three years from the date title transferred.
- Short sale or deed in lieu — generally three years, measured from the sale date.
Documented extenuating circumstances — a death, a serious illness, a job loss outside your control — can shorten some of these, at the underwriter's discretion and never automatically. The full comparison across loan types is in our guide to buying again after foreclosure, short sale or bankruptcy, and our editorial review of FHA loans weighs the program as a whole.
Practical sequence
Pull your scores first: the middle score of the lowest-scoring borrower drives the file. Ask two or three lenders — a credit union and a broker among them — whether they originate below 620, because that answer varies more than rates do. Get your county's FHA limit in writing before you set a price range. If a gift is funding the down payment, read our guide to gift funds before the money moves, because a deposit that arrives untraceably is the most common avoidable delay on an FHA file. And if any part of this is unclear, a HUD-approved housing counselor will walk through it with you at no cost.
Frequently asked questions
What credit score do I need for an FHA loan?
HUD allows 3.5% down at 580 and above, and 10% down between 500 and 579. Most lenders set their own floor higher — 580 is common, 620 is not unusual — so the practical minimum depends on which lender you ask. Nothing here is an approval; scores are one input among income, debts, assets and the property.
Can I ever get rid of FHA mortgage insurance?
Only two ways. If you put 10% or more down at origination, the annual premium ends after 11 years. Otherwise it lasts the life of the loan, and the exit is a refinance into a conventional mortgage once you have enough equity and a score that program accepts. Paying the balance down to 78% does not cancel FHA MIP the way it cancels PMI.
Can the entire down payment be a gift?
Yes. FHA permits 100% of the 3.5% to come from an acceptable source — a family member, an employer, a labor union, a charitable organization or a government down payment assistance program — provided the transfer is documented with a gift letter and a traceable trail from the donor's account to closing. Funds from anyone with an interest in the sale, such as the seller or the agent, are not acceptable.
What is the maximum FHA loan amount in 2026?
For a one-unit home, $541,287 in most counties and up to $1,249,125 in high-cost areas, with county-specific figures in between and higher limits for two- to four-unit properties. HUD sets the limits annually by mortgagee letter, effective for case numbers assigned during the calendar year.
Does an FHA loan require a home inspection?
No. FHA requires an appraisal, which includes a property-condition review against minimum standards but is performed for the lender, not for you. A separate buyer's home inspection is optional under the program and worth every dollar anyway — it looks at things the appraiser never opens.
Can you have two FHA loans at the same time?
Only under a documented exception. FHA insures one principal residence per borrower at a time, and the handbook exceptions cover an employment relocation, an increase in legal dependents where the current home has 25% equity, vacating a jointly owned home that a co-borrower still occupies, and a non-occupying co-borrower buying their own residence. Everything else is a no.
How far away does the new house have to be?
Under the relocation exception the new principal residence generally has to be more than 100 miles from the FHA-financed home, and the move has to be employment-related with work performed on site. Commuting distance is the idea the rule is protecting; a move that leaves you within a reasonable commute of the first home does not qualify.
Does an FHA appraisal replace a home inspection?
No. The appraiser protects the lender’s and HUD’s interest in the collateral, checks what is visible, and stops there. A home inspection is yours, is far more thorough, and is the only report written for your benefit. HUD says as much on the notice buyers sign.
Who pays for the repairs the appraiser requires?
Whoever the contract says. In practice it is usually the seller, since the work has to be finished before closing on a house you do not yet own. When a seller refuses, the realistic options are renegotiating the price, financing the work through a 203(k), or walking away.
Sources
Related: FHA vs conventional for a first-time buyer: which loan wins, and when, Credit score needed to buy a house: minimums by loan type, and what it costs to be average, PMI for first-time buyers: what it costs and how to get rid of it, Debt-to-income ratio limits by loan type — and how to lower yours. Hub: First-time buyer.