The core requirements for an FHA loan
To get an FHA loan, you need a credit score of at least 580 to put down 3.5 percent, or 500 to 579 if you can put down 10 percent. You must have a steady income that the lender can verify — usually through tax returns and recent pay stubs. The lender will check that your monthly debt payments (including the new mortgage) don't exceed 43 percent of your gross monthly income, though some lenders go up to 50 percent in certain cases.
You also need a valid Social Security number and a permanent resident visa or citizenship status. The property itself must be your primary residence — you cannot use an FHA loan to buy a second home or investment property. The home must pass an FHA appraisal, which means it meets minimum safety and livability standards set by the Department of Housing and Urban Development (HUD).
Bankruptcy and foreclosure don't automatically disqualify you. If you had a Chapter 7 bankruptcy, you typically need to wait two years after discharge. A Chapter 13 bankruptcy requires you to be in the repayment plan for at least one year. Foreclosure timelines vary by lender but often require three years to pass before you can explore.
Key Takeaways
- Your credit score must be at least 580 to put down 3.5 percent on an FHA loan, or 500 to 579 if you can put down 10 percent.
- Your total monthly debt payments, including the new mortgage, cannot exceed 43 percent of your gross monthly income (some lenders allow up to 50 percent).
- You must show steady income through recent tax returns and pay stubs, and the property must be your primary residence.
- A bankruptcy or foreclosure in your past does not automatically disqualify you, but waiting periods explore — typically two to three years depending on the type.
How lenders verify your income and employment
Lenders request your last two years of tax returns to confirm your income history. If you're self-employed, they may ask for profit-and-loss statements or business tax returns as well. For W-2 employees, they pull recent pay stubs — usually the last 30 days — and may contact your employer directly to confirm you still work there.
If you changed jobs recently, the lender wants to see that you moved into a similar role in the same field. A career change to a completely different industry can raise questions about income stability. Some lenders require a letter from your new employer stating your position, start date, and expected salary. If you receive income from sources like Social Security, disability, alimony, or child support, you'll need documentation showing that income will continue for at least three more years.
Credit score and credit history details
Your credit score is one number, but lenders also look at your credit report itself. They want to see that you pay bills on time. Recent late payments — especially in the last 12 months — are a bigger problem than older ones. A single 30-day late payment from five years ago is less concerning than a recent one.
Collections accounts, charge-offs, and unpaid judgments all appear on your report and can lower your score or cause a lender to deny you. However, if you've paid off an old collection account, that helps your case. Lenders also look at how much of your available credit you're using. If you're maxed out on credit cards, that signals financial stress even if you've paid on time.
You can order your credit report for free once per year from AnnualCreditReport.com, which is the official site run by the three major credit bureaus. Checking your own report doesn't hurt your score. If you find errors, you can dispute them directly with the bureau.
Down payment and cash reserves
FHA loans require a minimum down payment of 3.5 percent of the purchase price if your credit score is 580 or higher. If your score is between 500 and 579, you need to put down 10 percent. The down payment comes from your own funds — you cannot borrow it from someone else, though a family member can gift it to you if they provide a signed gift letter stating it's a gift, not a loan.
Some lenders also ask about cash reserves — money left in your bank account after you close on the loan. Having reserves shows you can handle an emergency without missing a mortgage payment. The amount varies by lender, but three to six months of mortgage payments in reserves strengthens your process, especially if your credit score is lower or your debt-to-income ratio is tight.
Debt-to-income ratio and how it's calculated
Your debt-to-income ratio (DTI) is the total of all your monthly debt payments divided by your gross monthly income. Gross income means what you earn before taxes. Monthly debt payments include your car loan, student loans, credit card minimums, child support, alimony, and the new mortgage payment you're explore for.
Most FHA lenders use a maximum DTI of 43 percent. This means if you earn $5,000 per month gross, your total monthly debt payments cannot exceed $2,150. Some lenders will go to 50 percent DTI if you have strong compensating factors — a large down payment, significant cash reserves, or a very high credit score. The mortgage payment itself is calculated using the loan amount, interest rate, property taxes, homeowners insurance, and mortgage insurance.
Property requirements and the FHA appraisal
The home must pass an FHA appraisal performed by an appraiser approved by HUD. This appraisal is different from a standard home inspection. The appraiser checks that the property meets minimum standards for safety, soundness, and livability. The roof must be in decent condition, the plumbing and electrical systems must work, and there cannot be major structural damage or hazardous materials like lead paint (in homes built before 1978, lead paint must be disclosed and managed).
The property must also be worth at least what you're paying for it. If the appraisal comes in lower than the purchase price, you have a few options: renegotiate the price with the seller, put down more money, or walk away. The lender will not lend more than the appraised value.
Certain property types don't may have access to for FHA loans. You cannot use an FHA loan for a condo unless the condo project is on HUD's approved list. Manufactured homes (mobile homes) may be financed with an FHA loan if they meet specific standards. Investment properties, vacation homes, and multi-unit properties where you don't live in one unit are not may be able to access.
Citizenship and residency status
You must be a U.S. citizen or a permanent resident (green card holder) to get an FHA loan. You'll need to provide proof of status — a birth certificate or passport for citizens, or a green card for permanent residents. You also need a valid Social Security number.
If you're a permanent resident, some lenders may require an Individual Taxpayer Identification Number (ITIN) as well, depending on your tax filing history. Non-citizens and those on temporary visas do not may have access to for FHA loans.
Frequently Asked Questions
Does a late payment from two years ago disqualify me from an FHA loan?
No. A late payment from two years ago is less of a concern than a recent one. Lenders focus more on recent payment history — the last 12 months matter most. If you've paid on time since then, you can still get an FHA loan, though your interest rate may be slightly higher than someone with perfect recent history.
Can I use a gift from a family member for my down payment?
Yes. A family member can gift you money for your down payment. The lender will require a signed gift letter from the person stating the amount, that it's a gift (not a loan), and that they don't expect repayment. You'll also need to show the money in your bank account before closing.
What happens if the home doesn't pass the FHA appraisal?
If the home fails the appraisal because of safety or structural issues, the seller must fix the problems before closing, or you can walk away from the deal. If the appraisal comes in lower than the purchase price, you can renegotiate the price, increase your down payment, or cancel the purchase.
Can I get an FHA loan if I'm self-employed?
Yes, but you'll need to provide more documentation. Lenders typically ask for two years of tax returns, profit-and-loss statements, and sometimes a CPA letter. Self-employed income must be stable or growing over that two-year period for the lender to count it.
How long do I have to wait after a foreclosure to get an FHA loan?
The waiting period varies by lender but is typically three years from the date the foreclosure was completed. If you can show the foreclosure was due to circumstances beyond your control — job loss, medical emergency, or natural disaster — some lenders may reduce the wait to two years.