Written by the Simply Approved Mortgages editorial team
Reviewed for program accuracy by our Simply Approved Mortgages underwriting desk — Licensed mortgage originators (NMLS) — Colorado & Florida. We summarize published federal program rules; we do not set them. This article is educational and is not a quote, approval, or commitment to lend.
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An FHA loan is a mortgage insured by the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (HUD). The FHA does not lend money directly — instead, it insures loans made by FHA-approved lenders so those lenders can take on borrowers who would not qualify for a conventional mortgage.
Who FHA loans are for
FHA loans were created in 1934 to make homeownership accessible. Today they remain the most flexible widely-available mortgage in the U.S. They are especially well-suited to:
- First-time homebuyers with limited savings
- Borrowers with FICO scores between 580 and 680
- Buyers in markets where they can't put 20% down
- Self-employed borrowers with documented (but irregular) income
- People rebuilding credit after bankruptcy or foreclosure (2-year and 3-year waiting periods apply)
The core 2026 numbers
- Minimum down payment: 3.5% with a 580+ FICO; 10% with a 500–579 FICO
- Floor loan limit: $541,287 (1-unit, low-cost county)
- Ceiling loan limit: $1,249,125 (1-unit, high-cost county)
- Hawaii exception ceiling: $1,873,625
- Maximum DTI: 43% (higher with compensating factors)
- Upfront MIP: 1.75% of the loan amount (financed)
- Annual MIP: 0.15% to 0.75% depending on LTV, term, and loan size
How FHA differs from conventional
A conventional loan typically requires a 620+ FICO and either 5% down (with PMI) or 20% down (no PMI). PMI on a conventional drops off automatically when you reach 78% LTV. FHA mortgage insurance, by contrast, lasts for the life of the loan in most cases — to remove it you have to refinance into a conventional once you have 20% equity.
In exchange for that lifetime MIP, FHA gives you:
- A lower credit threshold
- A lower down payment
- More flexible debt-to-income limits
- An assumable mortgage (a real advantage if rates have risen by the time you sell)
How to apply
Start with a pre-approval, which means a lender pulls your credit, reviews your income and assets, and issues a letter telling you exactly what you qualify for. With Simply Approved Mortgages our pre-approvals start with a credit review and we can often issue a letter quickly once a file is complete, though timing depends on lender review.