Who Qualifies for an FHA Loan: Credit, Income, and Property Rules

To qualify for an FHA loan, you need to be a U.S. citizen or lawful permanent resident, have a credit score of at least 500, show a steady two-year work history, keep your total monthly debts near 43 percent of your gross income, and buy a home you intend to live in as your primary residence. The Federal Housing Administration doesn’t lend money directly. It insures mortgages made by private lenders, which is why the qualification standards sit lower than those for conventional loans — especially for first-time buyers with modest savings or a thin credit file.

Credit Score and Down Payment

Your credit score sets the down payment. A FICO score of 580 or higher qualifies you for the minimum 3.5 percent down. A score between 500 and 579 still gets you an FHA loan, but you’ll need to put down 10 percent. Below 500, FHA financing isn’t available.¹

Lenders pull reports from Equifax, Experian, and TransUnion and use the middle of the three scores. Individual lenders often set higher floors than FHA requires. A lender might want 620 or 640 even though FHA guidelines accept 580, so if your score is on the lower end, it pays to shop more than one lender.

Income, Employment, and Debt-to-Income

Lenders want to see stable income. The standard is a two-year work history, verified through tax returns and W-2s. You don’t need to have held the same job the entire time; staying in the same line of work generally satisfies the rule. A gap of six months or more is not disqualifying if you’ve been in your current position for at least six months and can document a two-year work history before the gap.²

Your debt-to-income ratio is the share of your gross monthly income going to debt payments. FHA guidelines set the benchmark at 43 percent, counting the new mortgage, car loans, student loans, credit card minimums, and other recurring obligations. Groceries and utilities don’t count.³

Going above 43 percent isn’t an automatic no. With compensating factors such as cash reserves of at least three months of mortgage payments after closing, a strong credit history, or additional income not already counted, your lender may approve a higher ratio.³

If You’re Self-Employed

Self-employment doesn’t block you, but the paperwork is heavier. Plan on two years of complete individual federal tax returns with all schedules plus two years of business tax returns. You may be able to skip the business returns if your individual returns show increasing self-employment income over the past two years, your closing funds aren’t coming from business accounts, and the loan isn’t a cash-out refinance.²

If more than a calendar quarter has passed since the end of your last tax year, your lender will also want a year-to-date profit and loss statement. For corporations and S-corporations, a business credit report is required during manual underwriting.²

Citizenship and Residency Status

FHA loans are available to U.S. citizens, lawful permanent residents (green card holders), and citizens of the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau. Permanent residents must document their lawful status and meet the same requirements as citizens.⁴

In 2025, HUD eliminated FHA eligibility for non-permanent resident aliens. Borrowers on work visas or other temporary legal status previously could qualify; under the current rules they cannot.⁴

The Property Has to Qualify Too

The home must be your primary residence. At least one borrower has to move in within 60 days of closing and intend to live there for at least one year.¹ You cannot use an FHA loan for a vacation home or a rental you won’t occupy. Multi-unit properties up to four units are eligible if you live in one of the units.

An FHA-approved appraiser inspects the property before approval. The home must be structurally sound, with functional heating, cooling, electrical, and plumbing systems, and free of hazards like water damage, pest infestation, or lead-based paint. If it fails these standards, the seller typically has to make repairs before closing.

The 90-Day Anti-Flipping Rule

If the seller acquired the home fewer than 91 days before your purchase contract is signed, the property is not eligible for FHA financing. The rule exists to block quick-resale schemes at inflated prices. Government agencies selling foreclosures, financial institutions, HUD-approved nonprofits, and anyone who inherited the property are exempt, and properties in presidentially declared disaster areas can be exempt when HUD issues a specific notice.⁵

How Much You Can Borrow in 2026

FHA loan amounts are capped by county and property size. For 2026, the national floor for a single-family home in a lower-cost area is $541,287, and the ceiling in high-cost areas is $1,249,125.⁶ Your county’s limit falls somewhere in that range based on local home prices.

For multi-unit properties, the floors and ceilings run higher:

Two-unit: $693,050 to $1,599,375
Three-unit: $837,700 to $1,933,200
Four-unit: $1,041,125 to $2,402,625

These limits apply to FHA case numbers assigned on or after January 1, 2026.⁶ HUD’s website lists each county’s specific figure.

If You’re Short on Cash

Your down payment can come from gift funds, but only from approved sources: a family member, your employer or labor union, a close friend with a documented relationship, a charitable organization, or a government homeownership assistance program.¹ The gift cannot come from anyone with a financial interest in the transaction, such as the seller, the real estate agent, or the builder.

You’ll need a signed gift letter with the donor’s name, address, phone number, their relationship to you, the amount, and a statement that repayment is not expected. You’ll also need to show the actual transfer, usually through bank statements or wire records.¹

The seller is separately allowed to contribute up to 6 percent of the sale price toward your closing costs, including origination fees, discount points, prepaid items, and the upfront mortgage insurance premium. Seller concessions cannot be applied to the minimum down payment, and anything over your actual closing costs reduces the property’s value for loan calculation purposes.⁷

Qualifying After Bankruptcy or Foreclosure

Past financial trouble doesn’t permanently disqualify you, but there’s a waiting period.

After a Chapter 7 bankruptcy discharge, the standard wait is two years. If the bankruptcy was caused by circumstances beyond your control, such as a serious medical emergency, and you’ve handled your finances responsibly since, an exception may allow eligibility after 12 months. With Chapter 13, you may qualify while still in your repayment plan if at least 12 months of payments have been made on time and the bankruptcy court gives written permission for the new mortgage.⁸

A foreclosure, short sale, or deed-in-lieu triggers a three-year wait. The clock starts on the date title transferred away from you, not the date the process began.¹ If less than three years have passed, the file must go through manual underwriting rather than automated approval.

Mortgage Insurance Is Required

Every FHA loan carries mortgage insurance, which protects the lender if you default. The upfront premium is 1.75 percent of the base loan amount, paid at closing or rolled into the loan balance. On a $300,000 loan, that’s $5,250.⁹

The annual premium depends on your loan term, loan amount, and down payment. For a 30-year loan with the minimum 3.5 percent down and a base loan amount of $625,500 or less, the annual rate is 0.85 percent of the outstanding balance, billed monthly. Put at least 10 percent down and the rate drops to 0.80 percent.⁹

How long you pay it also depends on your down payment. Put down less than 10 percent and the annual premium stays for the life of the loan, with refinancing into a different loan type the only way to drop it. Put down 10 percent or more and the premium ends after 11 years.⁹ It’s a real cost difference worth weighing when you decide how much to put down.

1
U.S. Department of Housing and Urban Development (HUD). FHA Single Family Housing Policy Handbook 4000.1
2
U.S. Department of Housing and Urban Development (HUD). Mortgagee Letter 2022-09
3
U.S. Department of Housing and Urban Development (HUD). Section F – Borrower Qualifying Ratios Overview
4
U.S. Department of Housing and Urban Development (HUD). Mortgagee Letter 2025-09
5
eCFR. 24 CFR Part 203 Subpart A – Eligible Properties
6
U.S. Department of Housing and Urban Development (HUD). HUD’s Federal Housing Administration Announces 2026 Loan Limits
7
U.S. Department of Housing and Urban Development. What Costs Can a Seller or Other Interested Party Pay on Behalf of the Borrower
8
U.S. Department of Housing and Urban Development. How Does a Bankruptcy Affect a Borrowers Eligibility for an FHA Mortgage
9
U.S. Department of Housing and Urban Development (HUD). Appendix 1.0 – Mortgage Insurance Premiums