FHA Loans

An FHA loan is insured by the Federal Housing Administration and designed for borrowers whose credit or down payment does not fit conventional standards. It allows 3.5% down with a credit score of 580 or higher, and its underwriting is more forgiving of imperfect history. For 2026, FHA limits run from a floor of $541,287 to a ceiling of $1,249,125 for one-unit properties, depending on county.

FHA gets people into houses who would otherwise be told no. It also carries a cost structure that deserves a clear look before you commit.

What credit score do I need for an FHA loan?

FHA's published thresholds are the lowest of any widely available program:

• 580 or higher — 3.5% down
• 500 to 579 — 10% down

In practice, individual lenders apply their own overlays on top of FHA's minimums, and those vary considerably. A borrower turned down at one lender may be approved at another with the same file. As a broker we work with multiple wholesale lenders, so a single set of overlays does not decide your outcome.

FHA is also more accommodating on the events that derail conventional applications — a past bankruptcy or foreclosure, a short credit history, or a debt-to-income ratio above conventional comfort.

The mortgage insurance question

This is the part to understand before anything else, because it is where FHA costs real money over time.

FHA charges two mortgage insurance premiums: an upfront premium of 1.75% of the loan amount, which can be financed into the loan, and an annual premium collected monthly, which varies by loan term, loan amount, and loan-to-value.

The duration rule is what matters most:

• Put less than 10% down, and the annual premium generally stays for the life of the loan
• Put 10% or more down, and it generally drops off after 11 years

Conventional PMI, by contrast, is cancellable — by request at 80% of original value, automatically at 78%. On FHA at minimum down payment, there is no cancellation. The only exit is refinancing, and refinancing depends on rates and equity you cannot predict today.

That does not make FHA the wrong choice. It makes FHA a program you should enter knowing that the mortgage insurance is likely permanent unless you refinance — and that the plan for getting out of it is part of the decision, not an afterthought.

Verify current annual premium rates against your lender's published schedule before quoting a payment. The upfront premium and the duration rules above are stable; the annual rate schedule has changed several times and should be confirmed, not assumed.

What are the FHA loan limits where I'm buying?

FHA sets limits county by county, tied to local median home prices. For 2026, applying to case numbers assigned on or after January 1, 2026:

Most counties fall between. Limits are higher for two-, three-, and four-unit properties.

This matters in the markets we serve. Several California and Arizona counties sit at or near the ceiling, while much of Texas, Oklahoma, and Alabama sits at or near the floor — which means the same purchase price can be comfortably within FHA in one market and impossible in another.

What does the FHA appraisal check?

Like VA, FHA appraisals serve two purposes: establishing value and confirming the property meets HUD's Minimum Property Standards — safe, sanitary, and structurally sound.

Common issues that hold up an FHA closing include peeling paint on pre-1978 homes (a lead-paint concern), missing handrails, non-working utilities, roof problems, and inadequate heat. None are exotic. All are easier to address before the appraisal than after.

FHA loans are for primary residences. You are certifying that you intend to occupy the home, generally within 60 days of closing. You can buy up to four units with an FHA loan if you live in one of them — which is one of the more useful features of the program and one of the least used.

Is FHA right for you?

Roughly: FHA tends to win below about 660, conventional above about 700, and in between it is a real calculation involving your down payment, how long you expect to hold the loan, and whether the mortgage insurance ever comes off.

We run both. You should see the actual numbers rather than a rule of thumb.

---

FAQ

What is the minimum credit score for an FHA loan? FHA allows 580 with 3.5% down, or 500 with 10% down. Individual lenders add their own overlays, which is why the same file can be declined at one lender and approved at another.

Does FHA mortgage insurance ever go away? With less than 10% down, generally not — it stays for the life of the loan, and refinancing is the only exit. With 10% or more down, it generally drops off after 11 years.

What are the 2026 FHA loan limits? From a floor of $541,287 to a ceiling of $1,249,125 for one-unit properties, varying by county, effective for case numbers assigned on or after January 1, 2026.

Can I buy a duplex with an FHA loan? Yes, up to four units, as long as you occupy one as your primary residence.

Can I get an FHA loan after a bankruptcy or foreclosure? Often, after a waiting period that depends on the event and the circumstances. FHA is generally more forgiving here than conventional.