FHA Loan Qualifications

Federal Housing Administration- FHA loans are insured by the US government, so they have easier credit qualifying guidelines than most private or semi private lenders across country. In addition FHA Loans do have relatively low closing costs and down payment requirements.

What is the Minimum Down Payment required do get a FHA loan?

For a FHA loan, your down payment can be as low as 3.5% of the total purchase price. And the closing costs can be bundled with the loan too. In simple words, you don’t need much cash to close the deal.

What is the Minimum Credit Score required do get a FHA loan?

You should have at least a 580 credit score.   [10 Proven ways to Improve Credit Score ]

Borrowers with credit scores of 580 and above are eligible for maximum financing, or just 3.5% down. This is the low-down payment loan program the FHA is famous for.

What if my credit score is below 580?

If your credit score is between 500 and 579, your FHA loan is limited to 90% Loan To Value (LTV), meaning you must do a 10%  down payment.

Can I get an FHA loan with Zero Down Payment?

Technically & Legally NO. You need to provide 3.5% of the value of house as Down Payment, but if the 3.5% is gifted by an acceptable donor, it’s effectively zero down for the borrower.

For Rate and Term refinancing, you may get a Loan To Value (LTV) of 97.75% of the appraised value (plus the upfront mortgage insurance premium.) which is quite good.

If your credit score is below 500, you are not eligible for an FHA loan.

What is the max loan amount for a FHA loan?

$625K is the max loan amount (national loan limit ceiling) for FHA loans for one-unit property. But there are some exception like in case of Hawaiian counties its 15% more close to $720K. Additionally, the FHA loan limits are higher for 2-4 unit properties nationwide.

But on the downside in some counties,  FHA have loan limits are pretty low even in big cities. For example, FHA loan limit for Phoenix, AZ is  up to $271K. Even in Las Vegas its close to National floor level, its $287K.  In other counties such as San Diego, CA, max FHA loan max is set at $546,250. In other words, you have to check your county before assuming your loan amount will work with the FHA.

Do you need a reserves for an FHA loan?

NO, reserves are not required on FHA loans as long as it’s a 1-2 unit property. 

For 3-4 unit properties, you’ll need three months of PITI payments. And the reserves can't be gifted nor can they be proceeds from these type of transactions.

These all are FHA guidelines – Individual banks and Mortgage lenders will decide their requirement and they likely have higher minimum credit score requirements than 500. So it may happen that your score is 580 but you are still ineligible for for FHA loan from that lender. Please do check with Lender for what they have as base.