FHA Home Loan
Low down payments. Flexible credit requirements. Your path to homeownership starts here.
Why Choose an FHA Home Loan?
FHA home loans are government-insured mortgages designed to make homeownership accessible with lower barriers to entry.
Low Down Payment
Just 3.5% down with a 580+ credit score—significantly lower than conventional loan requirements.
Flexible Credit
Credit scores as low as 500 accepted, making homeownership possible even while rebuilding credit.
Gift Funds Allowed
Your entire down payment can come from family gift funds—no personal savings required.
Multi-Unit Properties
Purchase 2-4 unit properties and house-hack your way to building wealth.
Higher DTI Allowed
Debt-to-income ratios up to 50% in some cases, helping more borrowers qualify.
Assumable Loans
FHA financing is assumable, which can be valuable when selling in a higher-rate environment.
FHA Home Loan Requirements
Understanding qualification requirements helps you prepare for a successful application.
For 3.5% down. Scores 500-579 require 10% down. According to HUD guidelines, these are the minimum requirements.
Minimum down payment with 580+ credit. Gift funds from family are fully acceptable for the entire amount.
Typically allows up to 43% DTI, with flexibility up to 50% with strong compensating factors.
Works for single-family homes, condos, townhomes, and 2-4 unit multi-family properties.
🏠 FHA Home Loan House-Hacking Strategy
One of the most powerful wealth-building strategies: purchase a multi-unit property with just 3.5% down, live in one unit, and rent the others. This strategy is particularly effective because of the low down payment requirement.
- Purchase a duplex, triplex, or fourplex with FHA financing
- Live in one unit to satisfy the owner-occupancy requirement
- Rental income from other units helps you qualify for the loan
- Significantly reduce or eliminate your housing costs
- Build equity and investment experience while living on-site
- After 12 months, move out and convert to full rental property
Example: FHA Home Loan Fourplex Purchase
Purchase a $400,000 fourplex—just $14,000 down (3.5%). Rent three units at $1,200/month = $3,600 monthly income. Total mortgage payment: ~$3,100/month. Result: Live for free + $500/month positive cash flow.
2025 FHA Home Loan Limits & Mortgage Insurance
The Federal Housing Administration sets annual loan limits that vary by county. Understanding these limits helps you determine if this program is right for your purchase.
2025 FHA Home Loan Limits
Standard Areas: $524,225 for single-family properties
High-Cost Areas: Up to $1,209,750 for single-family properties
Higher limits apply for 2-4 unit properties.
FHA Home Loan Mortgage Insurance (MIP)
All FHA-insured mortgages require mortgage insurance to protect lenders against default. This insurance is what allows the program to offer such favorable terms. According to the Consumer Financial Protection Bureau, mortgage insurance includes both an upfront premium and ongoing annual premium:
| MIP Type | Amount | Payment Method |
|---|---|---|
| Upfront MIP | 1.75% of loan amount | Usually financed into loan |
| Annual MIP | 0.45% - 1.05% | Paid monthly with mortgage |
Important: MIP Duration
With less than 10% down, mortgage insurance remains for the life of the loan. With 10%+ down, MIP can be removed after 11 years. Many borrowers refinance into a conventional loan once they reach 20% equity to eliminate MIP entirely.
Who Should Consider an FHA Home Loan?
This program is an excellent choice for many borrowers. Consider applying if you are:
- First-time buyers with limited savings for a down payment
- Borrowers rebuilding credit after financial setbacks
- House-hackers looking to purchase multi-unit investment properties
- Buyers using gift funds for their entire down payment
- Those with higher DTI ratios who need more flexible debt guidelines
FHA Home Loan vs. Conventional Loans
Choosing between FHA and conventional financing depends on your specific situation. An FHA home loan typically offers easier qualification but requires mortgage insurance. Conventional loans may have lower long-term costs if you have strong credit. Per Fannie Mae guidelines, conventional loans require higher credit scores but allow PMI removal at 20% equity.
FHA Home Loan FAQs
The minimum down payment is 3.5% if your credit score is 580 or higher. If your credit score is between 500-579, you'll need at least 10% down. Your entire down payment can come from gift funds.
Credit scores as low as 500 are accepted, though you'll need 10% down for scores between 500-579. With a 580+ credit score, you can qualify with just 3.5% down. Higher scores help secure better rates.
Yes! You can purchase 2-4 unit properties as long as you live in one unit. This is an excellent house-hacking strategy—the rental income can help you qualify, and you can build wealth while reducing housing costs.
You must occupy the property as your primary residence within 60 days of closing and continue living there for at least 12 months. After that, you can move out and convert the property to a rental.
If you put less than 10% down, mortgage insurance remains for the life of the loan. With 10%+ down, MIP drops off after 11 years. Many borrowers refinance into a conventional loan once they reach 20% equity.
For 2025, the loan limit is $524,225 for most areas and up to $1,209,750 in high-cost areas. Limits vary by county and are higher for multi-unit properties. Check current limits on the HUD website.
No! FHA financing is available to any eligible borrower, not just first-time buyers. You can use this program even if you've owned property before, as long as you meet the requirements and will occupy the property as your primary residence.
Ready to Apply for an FHA Home Loan?
Whether you're a first-time buyer or an investor looking to house-hack, we'll help you navigate the process from start to finish.