Every FHA loan question, answered.

An FHA loan is a mortgage insured by the Federal Housing Administration. The FHA does not lend money — it insures loans made by FHA-approved lenders. This insurance lets lenders offer lower down payments (as little as 3.5%) and more flexible credit requirements than conventional mortgages.

FHA's official minimum is 500 with 10% down, or 580 with 3.5% down. In practice, most lenders require a 580 FICO at minimum, and many require 620. Simply Approved Mortgages can work with scores as low as 580 with strong compensating factors.

3.5% of the purchase price with a FICO of 580 or higher. 10% down if your FICO is between 500 and 579. The full down payment can come from a gift, a grant, or a down payment assistance program.

The 2026 FHA loan limit for a one-unit home ranges from $541,287 (low-cost counties) to $1,249,125 (high-cost counties). Hawaii, Alaska, Guam, and the U.S. Virgin Islands have a special exception ceiling of $1,873,625. Multi-unit limits are higher.

Yes. There's a 1.75% upfront MIP (financed into the loan) plus an annual MIP that's paid monthly. On a loan with less than 10% down, MIP lasts the life of the loan. To remove it, you refinance into a conventional loan once you have 20% equity.

No — FHA loans are for owner-occupied primary residences only. However, you can use an FHA loan for a 2-to-4-unit property as long as you live in one of the units. This is one of the most common ways to get started in real estate investing.

FHA's standard cap is 43% DTI. With compensating factors — strong credit, cash reserves, larger down payment — borrowers can sometimes go up to 50% or 57% DTI with manual underwriting.

Yes. The waiting periods are: 2 years after a Chapter 7 discharge, 1 year into a Chapter 13 (with court approval and on-time payments), 3 years after a foreclosure, and 3 years after a short sale. Re-established credit is required.

It's a simplified refinance for borrowers who already have an FHA loan. No appraisal, no income verification, and no full credit re-underwrite are required. You must have made on-time payments for 12 months and the refinance must produce a 'net tangible benefit' (typically a 0.5%+ reduction in combined rate + MIP).

Yes. An FHA loan can be assumed by a qualified buyer when you sell — they take over your loan, including the rate. This is a major advantage in a rising-rate environment. The buyer still has to qualify on credit and income.

30–45 days is typical for a standard FHA purchase. Streamline refinances often close in 2–3 weeks. 203(k) renovation loans take 45–60 days because of the appraisal, contractor bids, and consultant review.

Yes. FHA allows the seller to pay up to 6% of the sale price toward your closing costs, prepaid items (taxes, insurance, interest), and discount points. This is one of the most powerful tools for buyers with limited cash.

FHA: easier credit (580+), lower down payment (3.5%), lifetime mortgage insurance in most cases, assumable. Conventional: stricter credit (620+ typical, 740+ for best pricing), PMI drops off at 78% LTV. For credit scores below 680, FHA usually wins on combined monthly cost. Above 740, conventional usually wins.

Yes. FHA appraisers check both the home's value and its condition against HUD's Minimum Property Standards — working systems, no peeling paint on pre-1978 homes, no safety hazards, proper drainage, intact roof. Cosmetic issues are fine; structural and safety issues must be repaired before closing.

Yes — the entire down payment can come from a gift, as long as the gift is from a family member, employer, charitable organization, or down-payment assistance program. The donor signs a gift letter confirming no repayment is expected.

FHA always requires a 3.5% minimum investment, but it does not have to come from your own savings. The FHA down payment assistance second lien can cover that 3.5% for borrowers at 580 FICO and above, and a documented family gift can do the same. Pair either with up to 6% in seller-paid closing costs and your out-of-pocket cash can be close to zero.

FHA has no minimum or maximum income. What matters is your debt-to-income ratio: total monthly debt divided by gross monthly income, generally capped at 43% and stretchable to about 57% with strong compensating factors like reserves or a low payment shock.

Documented strengths that let an underwriter approve a higher-risk file: cash reserves after closing, minimal increase over your current rent, a long stable job history, little or no consumer debt, and residual income. They matter most on manually underwritten loans.

Yes, up to four units, as long as you occupy one of them as your primary residence for at least a year. Multi-unit county loan limits are higher than one-unit limits, and a portion of the projected rent on the other units can often be counted as income.

No. FHA prohibits prepayment penalties, so you can pay extra principal, refinance, or sell at any time without a fee.

Yes. A qualified buyer can assume your FHA loan and inherit your interest rate, subject to lender approval and standard credit qualification. In a higher-rate market, an assumable low-rate FHA loan can be a real selling advantage.

If you put less than 10% down, annual MIP stays for the life of the loan. The standard exit is refinancing into a conventional loan once you reach roughly 20% equity and your credit supports the switch. With 10% or more down, MIP cancels after 11 years.

Yes. FHA generally requires two years from a Chapter 7 discharge, or twelve months of on-time payments inside a Chapter 13 with court approval. Foreclosure and deed-in-lieu carry a three-year wait. Documented extenuating circumstances can shorten some of these.

Yes. FHA looks for a two-year history in the same business, verified with personal and business tax returns, a year-to-date profit-and-loss statement, and independent proof the business exists. Qualifying income is the two-year average of net profit after add-backs like depreciation.

CAIVRS is a federal database of delinquent government debt. An unresolved FHA insurance claim, defaulted student loan, or other federal delinquency shows up there and must be cleared before a new FHA loan can be approved.

Yes. FHA counts the actual payment reported on the credit report when it is greater than zero. If the reported payment is zero or the loan is deferred, a percentage of the outstanding balance is used instead.

Only if the project is on HUD's approved list or your specific unit qualifies under Single-Unit Approval. Owner-occupancy, HOA delinquency, reserve funding, insurance, and litigation status all factor into whether the building qualifies.

Yes, when the home was built after June 15, 1976, carries its HUD certification labels, sits on a certified permanent foundation, is titled as real property with the land, and has at least 400 square feet of living space.

Plan on 2% to 5% of the purchase price for lender fees, title, appraisal, recording, and prepaid taxes and insurance, plus the 1.75% upfront MIP, which is normally financed into the loan rather than paid in cash.

FHA pricing improves as scores rise, with meaningful pricing tiers around 620, 660, and 700. A 580 borrower and a 720 borrower can both get approved, but the 720 file typically prices measurably better.

Yes, and it is the most common way to eliminate lifetime mortgage insurance. You generally need about 20% equity and a credit profile that meets conventional guidelines to make the math work.

Usually one, because FHA loans must be owner-occupied. Limited exceptions exist for relocation for work, a documented increase in family size, vacating a jointly owned home after divorce, or a non-occupant co-borrower situation.

Not for most one- and two-unit approvals through automated underwriting. Three-to-four-unit properties and many manually underwritten files do require reserves, typically one to three months of PITI.

A reduced-documentation refinance available only to existing FHA borrowers. No appraisal and no income verification in most cases, but it must produce a net tangible benefit such as a meaningful payment or rate reduction.

Streamline refinances generally require six months of payments and 210 days from your first payment due date. Cash-out refinances have their own seasoning requirements based on ownership and occupancy.