FHA loan requirements in 2025 are basically a credit score of 580 or higher, a down payment of 3.5-10% of the purchase price, and typically a max debt-to-income ratio of 43%. FHA loan requirements are more flexible than conventional mortgages, making them a popular choice for first-time buyers and borrowers with lower credit scores. But they also come with mandatory lifetime mortgage insurance and stricter property standards. Even with the drawbacks, meeting FHA loan requirements can be a convenient path to homeownership in the right situation.
FHA loan requirements: At a glance
- Min. credit score: 580+ for 3.5% down; 500–579+ for 10% down
- Min. down payment: 3.5–10% depending on credit score
- Debt-to-income (DTI) ratio: Typically 43% max, up to 50% with strong compensating factors (like a lot of money saved). Use our FHA loan debt-to-income (DTI) calculator to find your DTI.
- Property standards: 1–4 units, must be your primary residence, must pass FHA appraisal and meet HUD’s minimum property standards
- Loan limits: Vary by county and if you live in a high-cost or low-cost area. Check the limit in the county you wish to buy.
- Mortgage insurance: 1.75% upfront MIP + 0.55%–1.05% annual MIP (rates reduced in 2023)
- Eligibility: U.S. citizens, legal residents, and certain non-permanent residents
- Documentation: Income, assets, ID, SSN, paper trail for funds, and gift letter if applicable
How FHA loan requirements work
FHA loans are insured by the Federal Housing Administration, which allows FHA-approved lenders to extend mortgages to higher-risk credit profiles. These FHA-insured loans mean lenders are protected by loss if a borrower defaults on their home loan.
Because the FHA insures these loans, approved FHA lenders extending these loans must abide by FHA loan requirements to underwrite the loan. These loan requirements aim to reduce the risk of lending to low- to moderate-income applicants while still giving them the opportunity to purchase a home. If you don’t meet the requirements, you may still qualify if you can get a cosigner for your FHA loan.
Is an FHA loan right for you?
Here's when an FHA loan might be the best option for you, although you should always consult with your mortgage lender and financial advisor before you decide which mortgage is right for you:
- Can’t qualify for a conventional home loan
- Have a lower credit score
- Have a smaller down payment
- Plan to occupy the property you'll use the loan for
- Have the potential to refinance out of the FHA loan at a later time to avoid paying ongoing MIP fees
- Meet additional FHA requirements, such as steady job history, debt-to-income ratio, etc.
Many lenders like FHA loans because it’s a government-backed loan product that reduces their risk of lending. However, it’s not the best loan for every situation. Conventional loans are a much better option if you qualify because they'll generally save you more money on fees and interest over the life of the loan. Your property also doesn't have to pass as strict of an inspection.
There are also some limitations you’ll face with FHA loans. For instance, you can borrow only for a property you will occupy. Conventional loans allow you to borrow for investment properties as well. FHA loans also restrict how much you can borrow, whereas conventional loans have higher limits.
FHA loan requirements vs. conventional loans
Conventional loans are for people with stronger credit profiles, a larger down payment, or other compensating factors that make them a lower credit risk than the typical FHA borrower. Conventional loans may have a slightly higher interest rate, but FHA loans do carry the MIP costs throughout the life of the loan while mortgage insurance drops off a conventional loan once you hit 20% equity. Learn more about the difference between FHA loans and conventional loans.
FHA loan requirements vs. VA loans
One key difference between FHA loans and VA loans is that you’ll pay a funding fee for a VA loan, which is typically 2.14% of the loan for first-time users and 3.3% after the initial loan.[1]
With an FHA loan, you’ll pay 1.75% UFMIP (upfront mortgage insurance premium) that can either be paid upfront or financed into the loan. You’ll also pay monthly mortgage insurance premiums throughout the life of the loan (it won’t come off once you hit 20% equity like it does with a conventional loan).
Like FHA loans, VA loans are insured by a government agency (U.S. Department of Veterans Affairs) and designed for a very specific demographic: eligible U.S. active duty service members and veterans. These loans require no down payment and are for properties up to four units. VA loans can be helpful for eligible borrowers who want to preserve cash with a no-down-payment loan.
FHA loan requirements vs. USDA loan requirements
USDA loans are backed by the United States Department of Agriculture. These loans are for eligible borrowers who meet certain income requirements and want to purchase a property in a USDA-eligible zone, which is usually a rural or underpopulated area. USDA loans don’t require a down payment, which can be helpful for many borrowers.
It’s very possible that you’ll be approved for both an FHA and a USDA loan if you meet the income and property location requirements. If you are looking to preserve cash with a lower down payment, then you’d opt for the USDA loan, which doesn’t require a down payment. If you prefer having a little more equity in the property with a higher down payment, then you’d go for the FHA loan.
FHA loan requirements and eligibility: In-depth breakdown
FHA loan down payment requirements: 3.5%
The FHA down payment is 3.5% for home buyers with a credit score of 580 or greater. Applicants with a credit score of 500 to 579 will need a 10% down payment.
FHA credit score requirements: 580
Generally speaking, 580 is the lowest credit score most lenders will accept for FHA loans, though in some cases a credit score of 500 is also acceptable with a larger down payment. You should speak with your several lenders to determine their particular credit score requirements.
FHA loan income limits and requirements: 40% of your monthly gross income can go toward the mortgage payment
The FHA will allow up to 40% of the borrower’s monthly gross income for a mortgage payment and with monthly debt, 50%. Although, most home buyers will be limited to a payment close to 31% and with monthly debt (including the proposed mortgage payment) to 43%.
FHA loan debt-to-income (DTI) ratio requirements: 43% DTI
Generally, FHA likes to see a debt-to-income ratio of 43%. In other words, the total amount of debt, including the new mortgage payment should not exceed 43% of the monthly gross income.
However, this requirement may be relaxed if other compensating factors are present. You can have a DTI up to 50% if you have strong compensating factors, such as:
- Significant cash reserves
- Additional verified income
- Minimal discretionary debt
- Strong credit history
In practice, many borrowers with a 45–50% DTI can still qualify if other parts of their profile are strong.
FHA property requirements: up to 4 units
FHA loans cover residential properties up to 4 units. If you use the property's rental income to help you qualify for the loan, the income must be equal to or greater than the total monthly mortgage payment. However, appraisers will use only 75% of the rental income to meet this “self-sufficiency” test. If your property doesn’t pass this test, you can provide a larger down payment to reduce the loan amount.
FHA loan limits 2025
There are maximum loan limits with FHA home loans that depend on your county and whether you live in a high-cost area or a low-cost area. The lending limit is set each year by the Federal Housing Finance Agency. The FHA loan limit is set at 115% of median house prices for the Metropolitan Statistical Area and county. To know which limit applies to you, you’ll need to first identify whether you’re in a floor or ceiling area (or in between).
FHA loan documentation requirements
- A current (non expired) government-issued ID
- Proof of a Social Security number
- Pay stubs (at least 30–90 days)
- Income tax returns from the previous 2 years
- W-2s, 1099s, and any other proof of income from the previous 2 years
- Bank statements (last 60 days)
- A letter explaining any large deposits in your bank accounts or gift funds that may be used in the transaction
FHA mortgage insurance
All FHA loans require two types of mortgage insurance:
- Upfront Mortgage Insurance Premium (UFMIP): 1.75% of the loan amount, usually rolled into the mortgage.
- Annual Mortgage Insurance Premium (MIP): Ranges from 0.45% to 1.05% of the loan, depending on loan term, size, and down payment.
💡 In February 2023, HUD reduced annual MIP by 30 basis points, lowering costs for new borrowers. This savings continues in 2025, making FHA loans more affordable than in prior years.
FHA interest rates
There are many factors that determine your interest rate, such as your creditworthiness, debt-to-income ratio, down payment amount, loan term, and the prevailing federal funds rate. To get an idea of your FHA loan interest rate, submit a loan application with a mortgage lender or broker. They are required, by law, to give you a loan estimate within 3 days of submitting a complete application. Your loan estimate will provide you with an idea of what your interest rate could be for the property you are considering.
Note, FHA interest rates are typically lower than conventional rates due to the government guarantee. This government backing reduces some risk for the lender and generally reduces FHA interest rates for borrowers.
However, the FHA insurance, or MIP, could increase the total cost of the loan, effectively wiping out any interest rate savings you may get from going this route. To get a true comparison of borrowing costs between FHA and conventional loans, ask your lender to produce loan estimates (LE) for both products. Then compare the APR (annual percentage rate) to find which loan has the lowest interest rate for your particular purchasing scenario.
Ready to apply for an FHA loan?
If you think an FHA loan is right for your next home purchase and you meet the FHA loan requirements, then it’s time to get the process started. If you have an existing relationship with an FHA-approved lender, like a bank or credit union, you can connect with one of their loan officers to start an application. You can also compare our top-ranked mortgage lenders if you need a place to get started.
Alternatively, you can connect with a mortgage broker with access to many lending products and financial institutions to help you find the best loan with the best terms.
Disclaimer: The information provided in this article is for informational purposes only. It is not intended as legal, financial, investment, or tax advice, and should not be relied upon as such. Consult a licensed financial advisor or tax professional regarding your personal financial situation before making any decisions.