The Basic Requirements for an FHA Loan

To get an FHA loan, you need a credit score of at least 580 if you want to put down 3.5 percent, or 500 to 579 if you can put down 10 percent. You also need a steady income that can cover your monthly mortgage payment plus property taxes, insurance, and homeowners association fees — lenders typically want your total housing costs to be no more than 43 percent of your gross monthly income, though some allow up to 50 percent depending on your other debts.

You must be a U.S. citizen, national, or permanent resident with a valid Social Security number. You need to have owned and occupied a primary residence at some point in the past three years, or be a first-time homebuyer (which the FHA defines broadly — even if you owned a home decades ago, you may still count as a first-time buyer). The property itself must be a single-family home, a duplex, triplex, or fourplex, and you must plan to live in it as your primary residence.

The FHA does not set a maximum income limit, but your debt-to-income ratio matters. This is the percentage of your gross monthly income that goes toward all your debts — mortgage, car loans, credit cards, student loans, and child support. Most lenders want this ratio at 43 percent or lower, though some go to 50 percent if you have strong compensating factors like savings or a low credit card balance.

Key Takeaways

  • You need a credit score of at least 580 to put down 3.5 percent, or 500 to 579 to put down 10 percent.
  • Your housing costs cannot exceed 43 percent of your gross monthly income, and your total debt cannot exceed 43 to 50 percent depending on the lender.
  • You must be a U.S. citizen, national, or permanent resident with a valid Social Security number and plan to live in the home as your primary residence.
  • The property must be a single-family home, duplex, triplex, or fourplex, and it must pass an FHA inspection to may support it meets safety and structural standards.

Credit Score and Payment History

Your credit score is the first thing a lender checks. The FHA itself does not set a minimum score — that is up to individual lenders — but most require 580 or higher for the 3.5 percent down payment program. If your score is between 500 and 579, you can still get an FHA loan, but you will need to put down 10 percent instead of 3.5 percent.

Lenders look at more than just your score number. They review your actual payment history on credit cards, car loans, and previous mortgages. A late payment from two years ago matters less than a recent one. If you have missed payments in the last two years, you will need to explain what happened — a job loss, medical emergency, or divorce carries more weight than a forgotten bill. Some lenders want to see at least two years of on-time payments before they will approve you.

Bankruptcy does not automatically disqualify you. If you filed Chapter 7 bankruptcy, you typically need to wait two years after the discharge date. If you filed Chapter 13, you may be able to borrow while the plan is still active, though most lenders prefer to wait until it is discharged.

Income and Debt-to-Income Ratio

Lenders verify your income by requesting recent pay stubs, W-2 forms from the past two years, and a signed tax return. If you are self-employed, you will need two years of tax returns and possibly a profit-and-loss statement. If you receive income from Social Security, disability, alimony, or child support, bring documentation showing that income will continue for at least three more years.

Your debt-to-income ratio is calculated by adding up all your monthly debt payments — mortgage, car loans, student loans, credit cards, child support — and dividing by your gross monthly income. If you earn $5,000 a month and your total debts are $2,000, your ratio is 40 percent. Most lenders want this at 43 percent or lower. Some will go to 50 percent if you have compensating factors: a larger down payment, significant savings, a lower credit card balance, or a co-borrower with strong income.

The FHA also calculates a front-end ratio, which is just your housing costs divided by your gross income. This is usually capped at 43 percent. Housing costs include your principal and interest payment, property taxes, homeowners insurance, mortgage insurance, and any homeowners association fees.

Down Payment and Savings Requirements

The FHA requires a minimum down payment of 3.5 percent of the home's purchase price. If you are buying a $200,000 home, you need $7,000 down. You do not need to save this money yourself — it can come from a gift from a family member, an employer, a nonprofit organization, or a government agency. The person or organization giving the gift must provide a signed letter stating the amount, that it is a gift with no repayment expected, and their relationship to you.

Lenders do not require you to have a specific amount of savings in the bank, but they do look at your bank statements to verify the down payment is there and to understand your overall financial picture. If you have very little savings and are living paycheck to paycheck, some lenders may see you as riskier, even if your income and debt ratio are acceptable.

The FHA mortgage insurance premium (MIP) is separate from your down payment. You pay an upfront MIP of 1.75 percent of the loan amount at closing, which is usually rolled into your loan. You also pay an annual MIP each month as part of your mortgage payment. This annual MIP ranges from 0.55 percent to 0.80 percent of the loan amount per year, depending on your down payment and loan term.

Employment and Residency Status

You must be a U.S. citizen, a national, or a permanent resident (green card holder) with a valid Social Security number. The FHA does not require you to have been in the country for any minimum length of time, but you do need to be able to prove your status with documents like a birth certificate, passport, green card, or employment authorization document.

Lenders want to see stable employment. If you have been at your current job for less than two years, bring documentation showing your previous employment history. If you changed jobs recently but stayed in the same field, that is usually fine. If you took a significant pay cut or changed careers, the lender may ask questions about whether your new income is stable and likely to continue.

You do not need to have owned a home before. The FHA defines a first-time homebuyer as someone who has not owned a home in the past three years. If you owned a home five years ago but have not owned one since, you count as a first-time buyer for FHA purposes.

Property Requirements and Inspection

The property must be a single-family detached home, a townhouse, a condo in an FHA-approved complex, a duplex, triplex, or fourplex. You cannot use an FHA loan to buy a vacant lot, a mobile home on rented land, or a property with more than four units. The home must be your primary residence — you cannot use an FHA loan for a vacation home or investment property.

The property must pass an FHA appraisal and inspection. An FHA appraiser visits the home and checks that it meets minimum property standards: the roof, foundation, plumbing, electrical system, and heating must be in safe working condition. The home cannot have lead-based paint hazards (for homes built before 1978), significant mold, or structural damage. If the inspection finds problems, the seller can repair them, or you can renegotiate the price.

The appraisal also determines the home's value. If the appraised value is lower than the purchase price, you have a few options: renegotiate with the seller, put down more money to cover the difference, or walk away. The lender will not lend more than the appraised value.

Co-Borrowers and Spouse Considerations

You can have a co-borrower on your FHA loan — typically a spouse or family member. Both of you must meet the credit and income requirements. The lender will add both of your incomes together and both of your debts together to calculate your combined debt-to-income ratio. This can help if one person has lower income or higher debt, because the other person's stronger finances can offset it.

If you are married but only one spouse is on the loan, the lender still needs to know about the other spouse's debts in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin). In these states, debts incurred during the marriage are considered community property, so the lender factors them in even if the spouse is not a co-borrower.

If you are going through a divorce, you may still be on your ex-spouse's debts until they are refinanced or paid off. The lender will count these debts toward your debt-to-income ratio, which can affect your approval.

Frequently Asked Questions

Can I get an FHA loan if I have had a foreclosure?

Yes, but you typically need to wait three years after the foreclosure is complete. Some lenders require five to seven years depending on the circumstances. If the foreclosure was due to a documented hardship like job loss or medical emergency, some lenders may approve you sooner. You will need to explain what happened and show that your finances have stabilized.

What if I have student loan debt?

Student loans count toward your debt-to-income ratio. If you are on an income-driven repayment plan, the lender uses your actual monthly payment. If you are not yet repaying (because you are still in school or in deferment), the lender may estimate your payment at 0.5 to 1 percent of the total loan balance, depending on the lender's policy. This can significantly affect your ratio, so ask your lender how they calculate it.

Do I need to be a first-time homebuyer to get an FHA loan?

No. Anyone can get an FHA loan as long as they meet the credit, income, and property requirements. The FHA defines first-time homebuyer broadly — if you have not owned a home in the past three years, you count as a first-time buyer. But even if you owned a home recently, you can still get an FHA loan; you just will not be in the first-time buyer category.

What happens if my debt-to-income ratio is too high?

You have a few options: pay down existing debts before explore, increase your income if possible, or look for a less expensive home. Some lenders allow up to 50 percent debt-to-income ratio if you have compensating factors like a larger down payment, significant savings, or a co-borrower with strong income. Ask your lender what compensating factors they accept.

Can I use a gift for my down payment if the gift giver is not a family member?

Yes. The gift can come from a family member, an employer, a nonprofit organization, a government agency, or a friend. The person or organization must provide a signed letter stating the amount, that it is a gift with no repayment expected, and their relationship to you. The lender may ask follow-up questions if the gift is unusually large or the relationship is unclear.