To qualify for an FHA loan, you need a credit score of at least 500, a down payment of 3.5% (with a score of 580 or higher) or 10% (with a score of 500 to 579), monthly debt payments that fit within FHA’s ratio limits, a two-year employment history, U.S. citizenship or lawful permanent residency, no delinquent federal debt, and a primary-residence property that passes an FHA appraisal. Everything else is detail built on those requirements.
Credit Score and Down Payment
FHA sets two credit tiers, and where you fall decides how much cash you bring to closing.
- A score of 580 or higher qualifies you for the minimum 3.5% down payment. On a $300,000 home, that’s $10,500.
- A score between 500 and 579 requires 10% down. On the same home, that’s $30,000.
Below 500, FHA won’t insure the loan. And FHA’s minimums are just that. Individual lenders set their own overlays, and many won’t lend below 580, with some drawing the line at 620. If your score is on the lower end, shop around; one lender’s no is another’s yes.
Debt-to-Income Limits
FHA weighs two ratios. The front-end ratio compares your total housing cost (principal, interest, taxes, insurance, and any HOA fees) to your gross monthly income; it should stay at or below 31%. The back-end ratio compares all of your monthly debt payments combined, including housing, to your gross income, and the ceiling is 43%.1HUD.gov. HUD 4155.1 Chapter 4 Section F – Borrower Qualifying Ratios Overview
Those aren’t hard walls. Compensating factors such as substantial cash reserves, minimal payment shock compared to your current rent, or a long history of managing similar debt can support higher ratios. FHA’s automated underwriting sometimes accepts back-end ratios in the mid-50s for borrowers with strong overall profiles, though that takes genuinely solid credit history and reserves.1HUD.gov. HUD 4155.1 Chapter 4 Section F – Borrower Qualifying Ratios Overview
How Student Loans Get Counted
Student loans catch a lot of FHA applicants off guard because the lender counts them toward your debt ratio even when you aren’t currently making payments. If your credit report shows a monthly payment above zero, the lender uses that figure. If the reported payment is zero, whether from deferment, forbearance, or an income-driven plan, the lender plugs in 0.5% of the total outstanding balance as your assumed monthly obligation.2HUD.gov. Mortgagee Letter 2021-13
That 0.5% calculation produces a large phantom payment. A $60,000 balance with a $0 reported payment gets treated as though you’re paying $300 a month. For borrowers on income-driven plans who actually pay far less, that math can push the back-end ratio over the line. The only fix is to get your servicer to report the actual payment on your credit report.
Employment and Income
FHA wants a two-year employment history to show your income is stable and likely to continue. You don’t need to have held the same job the whole time; the lender just needs to verify where you worked during that window. Job changes within your field are generally fine. Employment gaps longer than a month need a written explanation.3HUD.gov. Mortgagee Letter 2019-01
Base salary and hourly wages count. Overtime and bonus income count only if you’ve received them consistently for at least two years. Commission and self-employment income require two years of federal tax returns to establish a reliable average. The pattern has to be predictable, not just recent.
Citizenship and Residency
U.S. citizens qualify without any special documentation beyond what every applicant provides. Lawful permanent residents are eligible, but the lender has to document that status with evidence from U.S. Citizenship and Immigration Services. A Social Security card alone is not proof of immigration status.4HUD.gov. Revisions to Residency Requirements – Title I Letter 490
Citizens of the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau are eligible on the same terms as U.S. citizens. As of May 2025, HUD eliminated eligibility for non-permanent resident aliens. Without lawful permanent residency, you cannot currently obtain an FHA-insured loan.4HUD.gov. Revisions to Residency Requirements – Title I Letter 490
Waiting Periods After Bankruptcy or Foreclosure
Past financial setbacks don’t disqualify you forever, but FHA imposes mandatory waiting periods.
- Chapter 7 bankruptcy: two years from the discharge date. Documented extenuating circumstances beyond your control, such as serious illness or the death of a wage earner, can drop that to one year if you’ve shown responsible financial behavior since.5U.S. Department of Housing and Urban Development. How Does a Bankruptcy Affect a Borrowers Eligibility for an FHA Mortgage
- Chapter 13 bankruptcy: you may be eligible after 12 consecutive months of on-time payments under a court-approved repayment plan, with written approval from the bankruptcy court or trustee. Once the plan is discharged, the waiting period effectively ends.
- Foreclosure: three years from the date title transferred out of your name. Documented extenuating circumstances can shorten this if you’ve re-established good credit.
If a bankruptcy was discharged within two years of your application, your file gets downgraded to manual underwriting, where a human underwriter reviews everything against stricter scrutiny instead of the automated system.5U.S. Department of Housing and Urban Development. How Does a Bankruptcy Affect a Borrowers Eligibility for an FHA Mortgage
Federal Debt Screening
Before the loan moves forward, the lender runs your Social Security number through the Credit Alert Verification Reporting System (CAIVRS), a federal database that pools delinquent debt records from HUD, USDA, VA, SBA, and the Department of Education. If you show up as delinquent on any federal debt, you’re barred from an FHA loan until it’s resolved.6U.S. Department of Housing and Urban Development. Credit Alert Verification Reporting System (CAIVRS)
Federal law makes this an absolute bar, not a discretionary one. Defaulted student loans held by the Department of Education, previous FHA loans that went to claim, and unpaid SBA loans will block your application. Standard credit reports often don’t flag these as federal obligations, so CAIVRS catches what your credit score doesn’t.7Office of the Law Revision Counsel. 31 USC 3720B – Barring Delinquent Federal Debtors From Obtaining Federal Financial Assistance
The Property Has to Qualify Too
FHA only insures loans on a primary residence, and you have to move in within 60 days of closing. Investment properties and vacation homes don’t qualify. Eligible property types include single-family detached and semi-detached houses, townhouses, individual condo units in FHA-approved projects, manufactured homes on permanent foundations, and multi-unit buildings with up to four dwellings.8HUD.gov. FHA Single Family Housing Policy Handbook 4000.1
On a two- to four-unit purchase, you have to occupy one unit, and rental income from the other units can help you qualify.
Every FHA-financed property gets an appraisal that both confirms the market value supports the loan amount and checks that the home meets HUD’s minimum safety and livability standards. Common repair-before-closing issues include defective roofing, peeling paint on homes built before 1978, faulty electrical systems, and inadequate water supply. The appraisal is valid for 180 days from the effective date, and an update can extend it to one year if the transaction runs long.9HUD.gov. FHA Implements Revised Appraisal Validity Period Guidance
The purchase price also has to fit under FHA’s county-specific loan limit. For 2026, one-unit limits range from a $541,287 floor to a $1,249,125 ceiling, with higher amounts for two-, three-, and four-unit properties and a separate ceiling for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Check your county’s specific limit on HUD’s website; the 2026 limits apply to FHA case numbers assigned on or after January 1, 2026.10HUD. 2026 Nationwide Forward Mortgage Loan Limits11U.S. Department of Housing and Urban Development. FHA Loan Limits
Mortgage Insurance You’ll Actually Pay
Qualifying isn’t only about clearing the door. It’s about knowing the cost, and FHA’s mortgage insurance is where borrowers get surprised. There are two premiums.
The upfront mortgage insurance premium is 1.75% of your base loan amount. On a $300,000 loan, that’s $5,250. Most borrowers finance it into the loan rather than paying it out of pocket, which adds to the balance and the interest you pay over time.12HUD.gov. Appendix 1.0 – Mortgage Insurance Premiums
The annual premium depends on your loan term, loan amount, and down payment. For a 30-year loan at or below $625,500 with the minimum 3.5% down, the annual rate is 0.85% of the outstanding balance, divided into 12 monthly installments. Larger loans and shorter terms carry different rates.12HUD.gov. Appendix 1.0 – Mortgage Insurance Premiums
Here’s the catch that matters most. If you put down less than 10%, you pay the annual premium for the life of the loan. The only way to stop paying it is to refinance into a conventional mortgage once you have enough equity. Put down 10% or more, and the annual premium drops off after 11 years.12HUD.gov. Appendix 1.0 – Mortgage Insurance Premiums
Down Payment Sources and Documents
Your down payment can come from savings, or it can come from a gift. FHA is strict about who can give. Acceptable donors include a family member, your employer or labor union, a close friend with a documented relationship, a charitable organization, or a government homeownership assistance program. Anyone involved in the sale, including the seller, real estate agent, or builder, cannot give you down payment funds.13HUD.gov. HUD 4155.1 Section B – Acceptable Sources of Borrower Funds
Every gift requires a signed letter from the donor stating the amount and confirming no repayment is expected, plus a paper trail showing the money moved from the donor’s account to yours. Cash on hand is not an acceptable source for the donor’s funds; the money has to come from a verifiable account.13HUD.gov. HUD 4155.1 Section B – Acceptable Sources of Borrower Funds
Whether the money is yours or gifted, the lender will want documentation before the application moves. The core package:
- Pay stubs covering the most recent 30-day period.
- W-2 forms from the previous two years.
- Federal tax returns for the most recent two years, including all schedules. Self-employed borrowers and anyone with commission income need both personal and business returns.
- Bank statements covering the most recent two to three months, to verify funds for down payment and closing costs.
The lender uses those to verify what you report on the Uniform Residential Loan Application, which asks for a complete picture of your assets, debts, employment history, and personal information.14HUD.gov. HUD 4155.1 Section B – Documentation Requirements Overview One more requirement worth naming up front: you have to apply through a lender approved by HUD to originate FHA loans. Not every bank or mortgage company holds that approval, so confirm before you start.