What is the minimum credit score for an FHA loan?

The FHA minimum is 580 for a 3.5% down payment or 500 for a 10% down payment. However, many FHA-approved lenders set their own higher minimums, often requiring 620 or above.

Can I use an FHA loan to buy an investment property?

No, FHA loans are only for primary residences. You must intend to live in the home as your main residence. However, you can buy a multi-unit property (up to 4 units) and live in one unit while renting the others.

How long does FHA mortgage insurance last?

If your down payment is less than 10%, MIP is required for the entire life of the loan. If you put 10% or more down, MIP can be removed after 11 years. Many borrowers refinance to a conventional loan to eliminate MIP once they reach 20% equity.

What are FHA loan limits in California?

FHA loan limits vary by county. Many California counties are in high-cost areas with limits up to $1,149,825 for a single-family home. Check HUD's lookup tool for your specific county.

FHA Loans: Low Down Payment, Flexible Credit

FHA loans are government-backed mortgages offering as little as 3.5% down with credit scores starting at 580. Ideal for first-time homebuyers and borrowers with less-than-perfect credit.

What Is an FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development (HUD). FHA does not lend money directly — it insures loans made by approved lenders, protecting them against losses if borrowers default. This government backing allows lenders to offer more favorable terms to borrowers who might not qualify for conventional financing.

FHA Loan Requirements

Down Payment

3.5% minimum with a 580+ credit score. 10% required for scores between 500–579. Down payment can come from savings, gifts, grants, or down payment assistance programs.

Credit Score

Minimum 580 for 3.5% down, 500 for 10% down. Many lenders set higher minimums (often 620). Recent bankruptcies or foreclosures may require waiting periods.

Debt-to-Income

Front-end DTI up to 31%, back-end up to 43%. With compensating factors (reserves, high credit), DTI up to 50% may be accepted. Use our DTI calculator.

Mortgage Insurance

Upfront MIP: 1.75% of loan (rolled into loan). Annual MIP: 0.55% of loan divided by 12. Required for life of loan if down payment is less than 10%.

Property Requirements

Must be your primary residence. Must meet FHA minimum property standards (safety, security, soundness). FHA appraisal required — stricter than conventional.

Loan Limits

Vary by county. Standard limit: $498,257 (2024). High-cost areas (much of California): up to $1,149,825. Check HUD's lookup tool.

FHA Loan Pros and Cons

Pros	Cons
Low 3.5% down payment	MIP required for life of loan (if <10% down)
Credit scores as low as 500	FHA appraisal is stricter than conventional
Gift funds allowed for entire down payment	Property must be primary residence only
DTI up to 50% with compensating factors	Loan limits may be restrictive in some areas
Competitive interest rates	Upfront MIP adds 1.75% to loan cost

FHA Loan Types

Available FHA Programs

FHA 203(b): Standard purchase or rate-and-term refinance — the most common FHA loan.
FHA 203(k): Purchase and renovate in one loan. Standard 203(k) for major renovations, Limited 203(k) for up to $35,000 in repairs.
FHA Streamline Refinance: Simplified refinance for existing FHA borrowers — reduced documentation, no appraisal required.
FHA Cash-Out Refinance: Borrow up to 80% of home value and receive cash for any purpose.

Check today's FHA mortgage rates or use our FHA calculator to estimate your payment. Not sure if FHA is right? See our FHA vs. Conventional comparison.