FHA Loan Requirements 2026: Credit Score, Down Payment, Income, and Property Rules

Detailed Answer

This article is for informational purposes only and does not constitute financial, tax, or legal advice. FHA program requirements and loan limits change annually. Consult a qualified mortgage professional or HUD-approved housing counselor for guidance specific to your situation.

Reviewed for accuracy by the Home Loan Playbook editorial team. Our editors cross-reference all claims against the HUD FHA Handbook 4000.1, published FHA loan limits, and current CFPB guidance. Last reviewed: April 21, 2026.

Key Takeaways

• FHA loans require a minimum credit score of 580 for the standard 3.5% down payment, or 500-579 with a 10% down payment [1][2].
• The 2026 FHA loan limit for a single-family home ranges from $524,225 in low-cost counties to $1,209,750 in high-cost counties [3].
• Maximum debt-to-income ratio is typically 43%, though FHA permits up to 50-57% with compensating factors [1].
• Mortgage insurance premiums (MIP) apply to every FHA loan: 1.75% upfront (financeable into the loan) plus 0.55% annually for the life of the loan if down payment is below 10% [4].
• The property must meet HUD Minimum Property Requirements, pass an FHA-approved appraisal, and the borrower must occupy it as a primary residence within 60 days of closing [1].
• Borrowers with delinquent federal debt appearing on the CAIVRS database are disqualified until the delinquency is resolved [1].

What Is an FHA Loan

The Federal Housing Administration, a part of the U.S. Department of Housing and Urban Development (HUD), insures mortgages made by approved private lenders [2]. The FHA does not lend money directly. Instead, it provides insurance that protects the lender against loss if the borrower defaults. This insurance allows lenders to approve borrowers with lower credit scores, smaller down payments, and higher debt-to-income ratios than they would accept on a conventional loan.

FHA lending has existed since 1934 and currently backs roughly 12 percent of all single-family home purchase mortgages in the United States [4]. First-time buyers, lower-income households, and borrowers rebuilding credit after past financial difficulties rely on the program most heavily, though FHA loans are available to any qualifying borrower regardless of income level (with the exception of loan limit caps).

The trade-off for easier qualification is mandatory mortgage insurance. FHA borrowers pay both an upfront premium at closing and an annual premium that continues for the life of the loan in most cases. That insurance cost is what funds the FHA program.

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FHA Credit Score Requirements in 2026

Credit score rules are the most common starting point for FHA eligibility questions.

Minimum scores set by HUD

HUD sets two credit score tiers for FHA loans [1]:

Credit score	Down payment required	Underwriting type
580 or higher	3.5%	Automated underwriting typically available
500 to 579	10%	Manual underwriting required
Below 500	Not eligible	—

A borrower with a 580 score qualifies for the minimum 3.5 percent down payment. A borrower with a 520 score must put 10 percent down. A borrower with a 499 score cannot use an FHA loan regardless of down payment.

Lender overlays

HUD's minimums are the floor, not a guarantee of approval. Most FHA-approved lenders add their own credit score requirements, called "overlays." In 2026, common lender overlays set the practical minimum at 620 or even 640, even though the FHA itself allows 580. Shopping multiple lenders matters because overlays vary widely.

Borrowers in the 580-620 range often find approval at:

• Direct FHA lenders that follow HUD guidelines without additional overlays
• Credit unions, especially those with a community development focus
• Specialist lenders marketing to first-time buyers

Larger banks tend to apply stricter overlays.

What counts as a credit score

FHA uses the middle of three credit scores reported by Experian, Equifax, and TransUnion. If you have two or more scores, the median applies. Borrowers with only one reported score typically cannot qualify — some lenders require at least two or three scoring bureaus to report.

Borrowers with no credit history can sometimes qualify through manual underwriting using "alternative credit" documentation: twelve months of on-time rent payments, utility bills, insurance premiums, or other recurring obligations. This path requires lender willingness and additional documentation burden.

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FHA Down Payment Requirements

The 3.5 percent minimum is what makes FHA attractive to first-time buyers and borrowers with limited savings.

The 3.5% standard

For borrowers with credit scores at or above 580, the FHA requires 3.5 percent of the purchase price or appraised value (whichever is less) as a down payment [1]. On a $400,000 home, that is $14,000.

The 10% requirement for lower scores

Borrowers with scores between 500 and 579 must put 10 percent down. On that same $400,000 home, that is $40,000. The higher down payment compensates the lender for the additional risk of lending to a borrower with weaker credit.

Acceptable down payment sources

The FHA allows down payment funds to come from [1]:

• Personal savings: Funds held in checking, savings, or money market accounts for at least two months (sourced and seasoned).
• Retirement account withdrawals or loans: 401(k) loans and IRA distributions are permitted, though tax consequences apply to IRA withdrawals before age 59½.
• Gifts from family members: Parents, grandparents, siblings, and domestic partners can gift down payment funds with a properly documented gift letter stating no repayment is expected.
• Gifts from employers or labor unions: Less common but permitted with proper documentation.
• Down payment assistance programs: State, county, and city programs frequently pair with FHA loans. California's CalHFA MyHome Assistance Program is a prominent example — see our California first-time buyer programs guide for details.
• Sale of existing assets: Proceeds from selling a car, investment property, or other assets, provided the sale is documented.
• Secured loans on assets other than the home: Loans against a 401(k), investment account, or vehicle are permitted; unsecured personal loans are not.

Sources that are not allowed

The FHA prohibits down payment funds from the seller, the real estate agent, the lender, or any party with a financial interest in the transaction. Seller concessions toward closing costs are allowed separately (up to 6 percent of the sale price), but not toward the down payment itself.

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2026 FHA Loan Limits

FHA loan limits are set annually by HUD based on county-level median home values [3]. Limits are calculated as:

• Floor: 65 percent of the FHFA conforming loan limit
• Ceiling: 150 percent of the FHFA conforming loan limit

For 2026, the FHFA baseline conforming limit is $806,500, which produces an FHA floor of $524,225 and ceiling of $1,209,750 for single-family homes.

Single-family home limits by tier

County tier	2026 FHA limit (single-family)
Low-cost counties (floor)	$524,225
High-cost counties (ceiling)	$1,209,750
Intermediate counties	Between floor and ceiling (based on local median)

Intermediate counties have limits calculated as 115 percent of the county's median home value, up to the ceiling.

Multi-unit property limits

FHA allows purchase of two, three, and four-unit properties as long as the borrower occupies one unit as a primary residence. 2026 limits:

Units	Low-cost floor	High-cost ceiling
2-unit	$671,200	$1,548,975
3-unit	$811,275	$1,872,225
4-unit	$1,008,300	$2,326,875

Checking a specific county

HUD publishes the full county-by-county FHA loan limit table at entp.hud.gov. Confirm the current year's limits before making offers on properties near the threshold.

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FHA Debt-to-Income Ratio Requirements

The debt-to-income (DTI) ratio compares a borrower's monthly debt obligations to gross monthly income [1].

The two ratios FHA evaluates

FHA underwriters look at two separate DTI ratios:

1. Front-end ratio (housing ratio): Proposed monthly mortgage payment (principal, interest, taxes, insurance, HOA dues if applicable) divided by gross monthly income. The guideline maximum is 31 percent.

2. Back-end ratio (total debt ratio): Total monthly debt payments (proposed mortgage plus all other recurring debts — credit cards, car loans, student loans, alimony, child support) divided by gross monthly income. The guideline maximum is 43 percent.

Compensating factors allow higher DTI

FHA permits back-end ratios up to 50 or even 57 percent when compensating factors are present [1]. Compensating factors include:

• Cash reserves equal to at least three months of mortgage payments after closing
• Minimal debt obligations outside the mortgage (revolving balances under 10 percent of available credit)
• A down payment above 5 percent
• Additional income not counted in the primary qualification (part-time income without a two-year history, seasonal bonuses, overtime)
• Residual income above FHA's regional standard

DTI example

A borrower earning $5,000 per month with a proposed $1,400 mortgage payment and $400 in other monthly debts:

• Front-end: $1,400 / $5,000 = 28% (under the 31% guideline)
• Back-end: $1,800 / $5,000 = 36% (under the 43% guideline)

This borrower qualifies under standard FHA DTI rules without needing compensating factors.

Common debts that count against DTI

• Minimum monthly credit card payments (even if you pay in full each month, the minimum is used)
• Auto loan payments
• Student loan payments (FHA uses 0.5% of the outstanding balance if the loan is in deferment, or the actual payment if in repayment)
• Personal loan payments
• Court-ordered alimony or child support
• Other mortgages on properties you own (including rental properties unless rental income offsets)

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FHA Income and Employment Documentation

FHA requires documented, stable income.

Two-year employment history

FHA guidelines expect at least two years of stable employment or self-employment income [1]. Lenders verify through:

• Two most recent pay stubs
• W-2 forms for the past two years
• Year-to-date profit and loss statement (for self-employed borrowers)
• Two years of personal and business tax returns (for self-employed borrowers)
• Direct employer verification via Verification of Employment (VOE)

Job changes and transitions

A recent job change does not automatically disqualify an applicant if:

• The new position is in the same or related field
• The new income is stable and likely to continue
• No significant unexplained gaps exist in employment history

Switching industries, moving from W-2 to 1099 work, or a recent promotion with significantly higher pay requires additional documentation. Underwriters look for an upward or stable income trajectory, not decline.

Self-employed borrowers

Self-employed applicants need two years of complete business and personal tax returns, a current year-to-date profit and loss statement, and possibly a balance sheet. FHA calculates qualifying income as the lower of:

• Two-year average of net self-employment income
• Current year's net self-employment income (if lower than prior year)

Aggressive business deductions reduce net income and therefore qualifying income. A self-employed borrower with $120,000 in gross revenue and $70,000 in business deductions qualifies on $50,000 of net income, not $120,000.

Non-taxable income grossing up

Certain non-taxable income (Social Security, disability benefits, child support, some veteran benefits) can be "grossed up" by 15-25 percent for qualification purposes, reflecting the additional purchasing power from not paying income tax on those funds.

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FHA Property Requirements

Not every home qualifies for FHA financing. The property must meet HUD Minimum Property Requirements (MPR) and pass an FHA-approved appraisal [1].

Minimum Property Requirements

The MPR standards exist to ensure the property is safe, structurally sound, and will hold its value. Appraisers check for:

• Structural integrity: Foundation, roof, walls free of major defects
• Functional utilities: Working electrical, plumbing, heating, and in some climates cooling
• Safety hazards: No lead-based paint hazards in homes built before 1978, no exposed wiring, functional handrails on stairs
• Water supply and sewage: Functional, code-compliant systems
• Access: Year-round road access and safe entry
• Property condition: No significant pest damage, no unpermitted structural modifications

If an appraisal flags deficiencies, the seller or buyer must address them before closing or the FHA loan cannot fund. In competitive markets, some sellers refuse to entertain FHA offers specifically because they do not want to undertake repairs.

Property types that qualify

Property type	FHA eligible
Single-family detached home	Yes
Condominium	Yes, if complex is FHA-approved
Townhouse	Yes
Manufactured home	Yes, if on permanent foundation with title converted to real property
2-4 unit owner-occupied	Yes
Mixed-use (residential + commercial)	Conditional — residential must be 51% or more
Investment property	No
Vacation home	No

FHA-approved condominium complexes

To use FHA financing on a condo, the entire condominium complex must be on the FHA's approved list, or the individual unit must qualify for FHA single-unit approval. The HUD Condominium Approval Page provides a searchable database of approved complexes.

Many California condo complexes are not FHA-approved, which restricts buyer options in some markets. Condo boards can apply for FHA approval, but the process takes several months.

Appraisal validity

FHA appraisals are valid for 120 days (or up to 240 days with a 30-day extension). An appraisal on one FHA loan transfers to a replacement FHA loan if the original transaction falls through, with some documentation requirements.

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FHA Occupancy Requirement

FHA loans are for owner-occupied primary residences only [1].

The 60-day rule

Borrowers must occupy the property as their primary residence within 60 days of closing and continue to use it as their primary residence for at least the first year of the loan. Violating the occupancy requirement constitutes mortgage fraud and can result in loan acceleration (immediate full repayment demand), criminal charges in severe cases, and damaged credit.

What counts as primary residence

The property must be the borrower's principal dwelling — where they sleep, receive mail, register to vote, and carry out daily life. Spending occasional time at another residence (vacation home, family property) does not violate the requirement as long as the FHA property remains the primary one.

Non-occupant co-borrowers

FHA allows non-occupant co-borrowers who are immediate family members (parents, siblings, children). Their income counts toward qualification, but they do not need to occupy the property. This is a common structure for parents helping adult children purchase first homes.

Multi-unit properties

For 2-4 unit properties, the borrower must occupy one of the units. The remaining units can be rented. This structure is sometimes called "house hacking" and allows FHA borrowers to generate rental income while building equity.

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FHA Mortgage Insurance Premium (MIP)

Every FHA loan includes mortgage insurance, which is the non-negotiable cost of the program [4].

Upfront Mortgage Insurance Premium (UFMIP)

At closing, the borrower pays 1.75 percent of the base loan amount as UFMIP. On a $300,000 loan, that is $5,250. UFMIP can be financed into the loan rather than paid in cash, which most borrowers choose. Financing UFMIP means the actual loan amount is $305,250 ($300,000 + $5,250), and the higher balance is what the monthly payment is based on.

Annual MIP

The annual MIP is paid monthly (divided by 12 and added to the mortgage payment). The rate depends on loan term and loan-to-value (LTV) ratio:

Loan term	LTV	Annual MIP
30 years	Above 95%	0.55%
30 years	90-95%	0.50%
30 years	Below 90%	0.50%
15 years	Above 90%	0.40%
15 years	Below 90%	0.15%

On a $300,000 loan at 0.55 percent annual MIP, the monthly addition is $137.50.

Cancellation rules

The most important feature of FHA MIP is that it generally cannot be canceled. For loans taken out after June 2013:

• If the original down payment was less than 10 percent, annual MIP continues for the life of the loan, even after the borrower reaches 20 percent equity.
• If the original down payment was 10 percent or more, annual MIP can be canceled after 11 years of on-time payments.

This is the key difference between FHA MIP and conventional private mortgage insurance (PMI). PMI automatically cancels at 78 percent LTV. FHA MIP, for most borrowers, does not.

Refinancing out of FHA MIP

Because MIP cannot be canceled on most FHA loans, many borrowers refinance into a conventional loan once they reach 20 percent equity to eliminate the monthly insurance payment. This works if:

• Current credit qualifies for conventional financing
• Property value supports 80 percent LTV or lower
• Current interest rates make the refinance financially worthwhile

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Additional FHA Disqualifying Factors

Beyond the core requirements, several conditions can disqualify an applicant.

CAIVRS check

The Credit Alert Verification Reporting System (CAIVRS) is a federal database that tracks delinquencies on federal debts [1]. Lenders must check CAIVRS for every FHA applicant. Borrowers appearing in CAIVRS for any of these reasons cannot obtain an FHA loan until the delinquency is resolved:

• Defaulted federal student loans
• Delinquent federal tax debt
• Prior FHA loan defaults
• Other delinquent federal obligations (SBA loans, VA loans, etc.)

Resolving a CAIVRS delinquency typically requires paying the outstanding amount, entering an approved repayment plan, or obtaining a settlement. Once resolved, the borrower must wait for CAIVRS to update before applying, which can take 30 to 60 days.

LDP / SAM list

The Limited Denial of Participation (LDP) list and the federal System for Award Management (SAM) exclusion database track individuals and companies disqualified from federal programs. Applicants on either list cannot obtain FHA financing.

Prior bankruptcy or foreclosure

FHA waiting periods after major credit events:

• Chapter 7 bankruptcy: 2 years from discharge (or less with documented extenuating circumstances)
• Chapter 13 bankruptcy: 1 year of on-time payments in the plan, with trustee permission
• Foreclosure: 3 years from the foreclosure sale date
• Short sale: 3 years from the short sale completion (or less with extenuating circumstances)

These are FHA minimums. Individual lenders may apply longer waiting periods as overlays.

Existing FHA loan

A borrower can generally have only one FHA loan at a time. Exceptions exist for:

• Relocation for employment with a commute that makes the current home impractical
• Increase in family size that exceeds the current home's capacity
• Divorce (under specific circumstances)

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Step-by-Step: Preparing an FHA Application

6-12 months before applying

• Check your credit reports from all three bureaus and dispute any errors.
• Pay down revolving credit balances to reduce back-end DTI.
• Avoid new credit accounts and large purchases on credit.
• If self-employed, review upcoming tax filings with an understanding that aggressive deductions reduce qualifying income.

3-6 months before applying

• Save for down payment and closing costs (typically 6-7 percent of purchase price total).
• If using gift funds, begin the conversation with the family member so gift letter documentation is ready.
• Research FHA-approved lenders and compare their credit score overlays.
• Take a HUD-approved homebuyer education course if required by state or down payment assistance program.

1-2 months before applying

• Gather income documents (pay stubs, W-2s, tax returns).
• Gather asset documents (two months of bank statements, retirement account statements).
• Document any large deposits with explanation letters and supporting evidence.

During the application

• Respond to underwriting requests within 24-48 hours.
• Do not open new credit accounts, change jobs, or make large asset moves.
• Complete any required homebuyer education courses.

See our mortgage pre-approval guide for a detailed walk-through of the pre-approval process and what to expect during underwriting.

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Limitations of This Guide

• FHA guidelines change regularly: HUD updates the FHA Handbook 4000.1 periodically. Confirm current requirements with a HUD-approved lender or housing counselor before making decisions based on this information.
• Lender overlays vary: Individual lenders may require higher credit scores, lower DTI ratios, or additional documentation beyond HUD's minimums. Shop at least three FHA-approved lenders.
• Loan limits are county-specific: The $524,225 and $1,209,750 figures are the national floor and ceiling. The limit for your specific county may fall between these values. Verify at entp.hud.gov.
• No endorsement of specific lenders: This article describes FHA program requirements, not specific lenders or brands. Mention of any lender or program type is for informational comparison only.
• Tax and legal implications not addressed: FHA financing involves tax considerations (mortgage interest deduction, MIP deductibility) and legal documentation that require professional advice tailored to your situation.
• State-specific rules may apply: Some states have additional first-time buyer programs, disclosure requirements, or restrictions that affect FHA transactions. California, for example, has supplemental property tax rules that affect escrow calculations. Consult a local mortgage professional for state-specific guidance.

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Frequently Asked Questions

What are the requirements for an FHA loan?

FHA loan requirements include a minimum credit score of 580 for the standard 3.5% down payment (or 500-579 with 10% down), a maximum debt-to-income ratio of 43% (up to 50-57% with compensating factors), two years of documented employment or self-employment income, a property that meets HUD Minimum Property Requirements, owner-occupancy within 60 days of closing, and payment of mortgage insurance premiums (1.75% upfront plus 0.55% annually for the life of the loan if down payment is below 10%) [1]. Borrowers on the CAIVRS federal debt delinquency database are disqualified until the delinquency is resolved.

What are the FHA loan criteria for credit score and down payment?

The FHA allows a credit score as low as 580 with a 3.5% down payment. Borrowers with scores between 500 and 579 can qualify with 10% down. Scores below 500 are not eligible under FHA program rules. Most lenders add their own overlays, setting practical minimums at 620 or 640 [1]. Shopping lenders without overlays matters for borrowers in the 580-620 range.

What are the FHA home loan qualifications in 2026?

FHA home loan qualifications in 2026 include the credit and down payment tiers above, a maximum loan amount based on county (ranging from $524,225 to $1,209,750 for single-family homes), stable two-year employment history, DTI below 43% (with exceptions up to 57%), property meeting HUD Minimum Property Requirements, and owner-occupancy [1][3]. Borrowers with recent bankruptcies or foreclosures face waiting periods of 2-3 years before qualifying.

What are the requirements for an FHA mortgage down payment?

The FHA requires a minimum down payment of 3.5% of the purchase price for borrowers with credit scores of 580 or higher, or 10% for borrowers with scores between 500 and 579 [1]. Down payment funds may come from personal savings, retirement accounts, gifts from family members, or approved down payment assistance programs. Funds cannot come from the seller, real estate agent, or lender. Gift letters documenting that no repayment is expected are required for gifted funds.

What are the FHA mortgage qualifications for self-employed borrowers?

Self-employed FHA borrowers must provide two years of complete business and personal tax returns, a current year-to-date profit and loss statement, and documentation of stable or growing income [1]. Qualifying income is calculated as the lower of the two-year average net self-employment income or the current year's net income. Business deductions reduce net income and therefore qualifying income. A self-employed applicant with $120,000 gross revenue and $70,000 in deductions qualifies on $50,000, not $120,000.

What are the FHA requirements for a home loan property appraisal?

The FHA requires an appraisal by a HUD-approved appraiser to confirm the property's value and that it meets Minimum Property Requirements [1]. The appraiser checks structural integrity, functional utilities, safety hazards, water and sewage systems, and property condition. Deficiencies flagged in the appraisal must be repaired before closing. The appraisal is valid for 120 days. If the appraised value is below the purchase price, the borrower must pay the difference in cash or renegotiate the price — FHA will not insure a loan above appraised value.

Can I get an FHA loan with a previous bankruptcy or foreclosure?

Yes, after required waiting periods. FHA allows loans two years after Chapter 7 bankruptcy discharge (or less with documented extenuating circumstances), one year into a Chapter 13 repayment plan with trustee permission, three years after a foreclosure sale, and three years after a short sale [1]. Lender overlays may extend these waiting periods. Borrowers must demonstrate rebuilt credit and stable finances during the waiting period.

This article is for informational purposes only and does not constitute financial, tax, or legal advice. FHA program requirements and loan limits change annually. Consult a qualified mortgage professional or HUD-approved housing counselor for guidance specific to your situation.