FHA loans require minimum 580 credit score (3.5% down) or 500-579 (10% down), max 43% debt-to-income ratio, and valid employment. Unlike conventional loans, FHA is more flexible with credit history and allows gift funds for down payment. Mortgage insurance is required for the life of the loan.
Credit score requirements
Minimum 580 for 3.5% down payment. With 500-579 score, you need 10% down. Most lenders require 620+ for approval; few accept 580-619 range. Your score is pulled from all three bureaus (Equifax, Experian, TransUnion); the middle score is used.
Debt-to-income limits
Max debt-to-income ratio (DTI) = 43% for most borrowers (all monthly debts ÷ gross income). Some lenders accept up to 50% with compensating factors (large cash reserves, excellent credit, stable employment). Example: $5,000/month income, max debt = $2,150/month. Your mortgage payment counts as debt.
Down payment options
FHA allows 3.5% or 10% down; you choose. 3.5% = lower immediate cost but lifetime mortgage insurance. Gift funds from family permitted; seller concessions allowed up to 6%. No requirement to prove you earned the down payment—borrowed funds are acceptable.
Mortgage insurance premiums
Upfront MIP: 1.75% of loan amount, added to balance. Annual MIP: 0.55% for loans >95% LTV. MIP stays for the life of the loan (unlike conventional PMI which drops at 20% equity). Total cost: significantly higher than conventional long-term.
Employment and income verification
Lender verifies current employment (recent pay stubs, W-2s) and 2-year work history. Self-employed borrowers need 2 years of tax returns. Rental income, alimony, child support, and retirement income all count. Social Security and pension income are acceptable.
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Get Free Quotes →Frequently Asked Questions
Can I get FHA with 500 credit score?
Yes, with 10% down payment and compensating factors. Most lenders won't go below 580; those who do charge 2-3% higher rates and may require larger reserves.
What is FHA mortgage insurance?
Insurance protecting the lender if you default. You pay for it (upfront 1.75% + annual 0.55%), not the lender. It's required for the life of the loan.
Can I use a gift for my down payment?
Yes—FHA allows unlimited gift funds from family or employers. Lender requires a gift letter stating the money is a gift, not a loan you must repay.
What employment history do I need?
2-year work history, current employment. Gaps under 30 days are acceptable. If unemployed, explain the reason in a letter.
Are there loan amount limits?
FHA loan limits vary by county (2026 limits typically $480k-$1.1M). Your state/county limit is available on HUD.gov. Conforming loan limits vary annually.