Government-backed loans with down payments as low as 3.5%. Perfect for first-time buyers and those with limited savings or lower credit scores.
Start with just 3.5% down - often $10,000-15,000 for many homes
Qualify with credit scores as low as 580 for 3.5% down
Your entire down payment can come from family gifts
An FHA loan is a mortgage insured by the Federal Housing Administration, a government agency. The FHA doesn't lend money directly—we do—but the FHA insures the loan, which allows lenders like us to offer more favorable terms to borrowers who might not qualify for conventional financing.
Created in 1934 during the Great Depression, the FHA loan program was designed to stimulate the housing market and help more Americans become homeowners. Today, it remains the most popular loan option for first-time buyers.
Understanding the key differences
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Minimum Down Payment | 3.5% | 3-5% |
| Minimum Credit Score | 580 | 620-640 |
| Debt-to-Income Ratio | Up to 57% | Up to 50% |
| Mortgage Insurance | Required (life of loan) | Required until 20% equity |
| Property Requirements | FHA minimum standards | Less stringent |
| Loan Limits | $498,257 (most areas) | $766,550 |
| Best For | First-time buyers, lower credit | Strong credit, 10%+ down |
Credit Score: 580-680
Down Payment: Less than 10%
DTI Ratio: Higher than 45%
Just 3.5% down makes homeownership accessible. On a $300,000 home, that's only $10,500 versus $60,000 for 20% down.
Qualify with a 580 credit score (or 500-579 with 10% down). Perfect if you're rebuilding credit.
Your entire down payment and closing costs can come from gifts from family members or approved sources.
FHA allows debt-to-income ratios up to 57%, while conventional loans typically cap at 45-50%.
Sellers can contribute up to 6% of the purchase price toward your closing costs, reducing your upfront cash needs.
FHA loans are assumable, meaning a future buyer could take over your loan—valuable if rates rise.
Here's what you need to qualify
FHA loans require two types of mortgage insurance premium (MIP):
Note: If you put down 10% or more, MIP drops off after 11 years. This is the trade-off for the low down payment and flexible credit requirements.
See what your monthly payment would look like with just 3.5% down
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*Estimate includes principal, interest, and MIP. Does not include property taxes, insurance, or HOA fees.
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Property must pass FHA inspection to ensure it meets standards
Sign documents, get your keys, and welcome home!
Yes! FHA loans aren't just for first-time buyers. Anyone who meets the credit and income requirements can use an FHA loan, whether it's your first home or fifth. You just need to be purchasing your primary residence.
FHA loan limits vary by county. For 2025, most areas have a limit of $498,257 for single-family homes, though high-cost areas can go up to $1,149,825. We can help you determine your specific area's limits.
If you put down less than 10%, FHA mortgage insurance lasts for the life of the loan. Your only way to remove it is to refinance to a conventional loan once you have 20% equity. If you put down 10% or more, MIP drops off after 11 years.
If the property doesn't pass the FHA appraisal, you have options: the seller can make repairs before closing, you can negotiate a lower price, or you can walk away. The FHA standards are there to protect you from buying a home with serious issues.
Yes, but the property must be livable and meet minimum property standards at closing. If you want to buy a home that needs significant repairs, consider an FHA 203k loan, which combines purchase and renovation costs into one loan.
FHA is more forgiving than conventional loans. You can qualify 2 years after a bankruptcy discharge or 3 years after a foreclosure. With extenuating circumstances (job loss, medical issues), these waiting periods may be shorter.
Still have questions?
View All FAQsWith just 3.5% down and flexible credit requirements, your dream of homeownership is closer than you think. Let's get you pre-approved today.