FHA Loans: Requirements & Who Qualifies

FHA loans are insured by the Federal Housing Administration and designed to make homeownership more accessible. Because the government backs them, lenders can offer more flexible terms than many conventional loans.

Key Requirements

Credit Score

FHA loans generally allow lower credit scores than conventional loans. A higher score usually unlocks the lowest down payment, while lower scores may require more down. Lenders can also set their own minimums above the FHA floor.

Down Payment

FHA loans are known for low down payments — often as little as 3.5% for qualified borrowers. The funds can sometimes come from a gift, which helps first-time buyers.

Mortgage Insurance

FHA loans require mortgage insurance premiums (both upfront and annual). This protects the lender and is a key cost to factor in — it can make FHA more or less attractive than conventional depending on your situation.

Loan Limits

FHA sets maximum loan amounts that vary by county and are higher in expensive housing markets. Make sure the home you want falls within the limit for your area.

Who FHA Loans Suit Best

FHA loans are often a strong fit for first-time buyers, people rebuilding credit, or anyone who can't make a large down payment. If you have excellent credit and a sizable down payment, a conventional loan may cost less overall — worth comparing both.

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Keep Reading

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