An FHA loan is a mortgage insured by the Federal Housing Administration (FHA). FHA offers low down payments and interest rates may be less impacted by the borrower’s credit score. Gift funds may be  acceptable with FHA financing.  The debt to income requirements are less stringent as compared to conventional, which often means more purchasing power.  It is typically fixed in its terms and rate and terms over the life of the loan.


FHA loans can be easier to qualify for. The requirements for an FHA loan are generally more lenient than conventional loans or other loan types when it comes to credit, income, and down payment requirements.

Low down payment

With FHA loans, you don’t need a large down payment to become a homeowner. You could put down as little as 3.5% for a fixed-rate FHA loan if your FICO score is high enough.

Credit score

To qualify for the low down payment of 3.5%, you need to meet a minimum FICO score specified by your lender. This score can vary from lender to lender, but FHA score requirements are generally lower than the requirements of other loans, including conventional.

Housing options

You can use an FHA loan on several property types, including a single-family home, a multifamily home with up to four units, a condo, or a manufactured home.

However, you can only use an FHA loan to buy a home you plan to live in as a primary residence. To finance a vacation home or investment property, you’ll need to consider another type of loan.

  • The FHA sets lower credit score limits for borrowers as well as a 3.5% minimum down payment.
  • The FHA has determined different price ceilings when it comes to the purchase price of the home. These caps vary according to location and are regularly updated.
  • Income and employment is an eligibility factor in regards to FHA loans. Lenders require that a borrower can show proof of steady employment with “effective income.”
  • The home being purchased or refinanced must be the borrower’s primary residence; the FHA requires that the property be an owner-occupied dwelling.

How can I improve my credit rating?

One of the most important aspects of getting your credit rating in shape before applying for an FHA home mortgage is time. If you believe your credit is in poor shape, you’ll want to establish payment reliability over a period of at least one year before starting your FHA loan paperwork.

How do I pre-qualify for an FHA loan?

Many factors will be taken into consideration during the pre-qualification process. You must be able to show that you are employable and demonstrate job stability. Reliability is a important, and is demonstrated by your ability to hold a steady job for at least two years with the same company or employer. Your income should at a minimum stay consistent, though increasing income always looks better.

Can I Qualify for an FHA loan with a High DTI?

The typical debt to income ratio ceiling is 43% for an FHA loan. However, we work with lenders who may permit DTI ratios to go as high as 50%.

Can I get an FHA loan with student loan debt?

You can still qualify for an FHA loan even if you have student debt. The lenders are required to handle that debt differently on your loan application. We recommend that you speak with one of our FHA lenders to discuss your scenario and see how much you can qualify for.

Can I qualify for an FHA loan if I have a bankruptcy?

You may still qualify for an FHA loan even with a bankruptcy in your history. However, the FHA guidelines require that you wait at least two years and have proven to get back on your feet financially while rebuilding your credit.

Can I qualify for an FHA loan if I am self employed?

Self employed individuals can absolutely qualify for an FHA loan. However, they will need to qualify using the net income on their tax returns. Most self employed borrowers show a low net income due to all of the tax write offs which makes it difficult for them to qualify for an FHA loan.

FHA Loan Programs

Fixed-Rate Mortgage

Fixed-rate mortgages protect you against rising rates since the interest rate remains the same for the entire term of the loan. With FHA loans, you can select a 30-, 20- or 15-year term. The main difference is the lower term options have higher monthly payments, which also means you are building home equity faster. Keep in mind you can use equity as a down payment for your next home or a future cash-out refinance. If you plan on staying in your home for a longer time frame, a fixed-rate mortgage could be the right solution for you.

Streamlined Refinance

If you currently have an FHA mortgage, we may be able to help you reduce your interest rate and lower your monthly mortgage payments with an FHA streamlined refinance. Plus, a streamlined refinance requires limited borrower credit documentation and underwriting for an even easier process. This may be the right solution if you want to convert your ARM to a fixed-rate loan.

Adjustable-Rate Mortgage

FHA’s adjustable-rate mortgage (ARM) insures home purchases or refinances with rates that can change after the initial fixed-rate period. Depending on market fluctuations after this initial fixed-rate period, your monthly payments could change due to rates increasing or decreasing. An ARM could be the right choice for you if you plan on staying in your home for just a few years, you’re expecting a future pay increase, or the current interest rate on a fixed-rate mortgage is too high.