The basic requirements FHA lenders check

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 if you can put down 10 percent. You must have a steady income that the lender can verify through tax returns, W-2s, or pay stubs — usually the last two years of history. You also need a valid Social Security number and legal residency or citizenship status in the United States.

The property itself must be your primary residence, meaning you plan to live there most of the year. It cannot be a second home or investment property. The home must pass an FHA appraisal, which checks that it meets minimum safety and livability standards — things like working plumbing, heating, and a roof that does not leak.

Your debt-to-income ratio matters: lenders typically want your total monthly debt payments (including the new mortgage) to be no more than 43 to 50 percent of your gross monthly income, though some lenders go higher. You must also have a down payment saved — the minimum is 3.5 percent of the purchase price for borrowers with a 580 credit score.

Key Takeaways

  • You need a credit score of at least 580 (with 3.5 percent down) or 500 (with 10 percent down), plus two years of verifiable income history.
  • The property must be your primary residence and pass an FHA appraisal that confirms it meets basic safety standards.
  • Your total monthly debt payments cannot exceed 43 to 50 percent of your gross monthly income, depending on the lender.
  • You must be a U.S. citizen or permanent resident with a valid Social Security number and a down payment of at least 3.5 percent saved.
  • FHA loans allow gifts from family members to cover part or all of your down payment, which is different from many conventional loans.

Credit score and payment history

The FHA does not set a single credit score requirement — that is up to individual lenders. However, most lenders will not approve you below 580 if you are putting down 3.5 percent. If your score is between 500 and 579, you will need to put down 10 percent instead. Some lenders have higher minimums, so it is worth checking with several.

Lenders look at more than just your score. They review your credit report for late payments, collections, charge-offs, and bankruptcies. A bankruptcy does not automatically disqualify you — FHA loans are available to people who filed Chapter 7 bankruptcy at least two years ago or Chapter 13 at least one year ago (and are still making payments). Late payments older than two years matter less than recent ones.

If you have missed payments or other negative marks, the lender will ask you to write a letter explaining what happened. Job loss, medical emergency, or divorce are common reasons lenders hear. The explanation does not erase the mark, but it helps the lender understand whether the problem is behind you.

Income and employment verification

You must show two years of employment history. If you are salaried or hourly, the lender will ask for recent pay stubs (usually the last 30 days) and your last two years of tax returns. If you are self-employed, you will need two years of tax returns, and the lender will average your income across those years to account for business ups and downs.

If you changed jobs recently, that is usually fine as long as you stayed in the same field. The lender wants to see that your income is stable and likely to continue. If you switched careers or took a significant pay cut, the lender may ask questions or require a letter from your new employer confirming your position and salary.

Bonus income, commission, or overtime can count toward your income, but only if you have received it for at least two years. If you just started a job with commission or bonus pay, the lender will not include it yet. Retirement income, Social Security, disability payments, and child support all count as verifiable income.

Down payment and gift money rules

The minimum down payment for an FHA loan is 3.5 percent of the purchase price. On a $200,000 home, that is $7,000. You can cover this with your own savings, or the FHA allows you to receive a gift from a family member — a spouse, parent, sibling, grandparent, or anyone related by blood, marriage, or adoption.

The gift must come with a signed letter from the person giving it, stating that it is a gift and does not need to be repaid. The lender will verify that the money actually came from that person by reviewing bank statements. You cannot borrow the down payment from anyone — it must be a true gift or your own money.

Some employers, nonprofits, and government programs offer down payment information. If you receive information from a program, the lender needs to know about it and will verify the terms. information that is a true grant (not a loan) counts the same way as a family gift.

Debt-to-income ratio and monthly obligations

Your debt-to-income ratio is the total of all your monthly debt payments divided by your gross monthly income. The FHA allows up to 43 percent as a standard limit, but many lenders will go to 50 percent if you have a strong credit score, savings, or other compensating factors.

Monthly debt includes your car loan, student loans, credit card minimum payments, child support, alimony, and the new mortgage payment. It does not include utilities, insurance, groceries, or other living expenses. If you earn $4,000 per month and your total debt payments are $1,500, your ratio is 37.5 percent.

If your ratio is too high, you have a few options: pay down existing debt before explore, increase your income (though this takes time to verify), or look at a lower purchase price so the mortgage payment is smaller. Some lenders are more flexible than others, so shopping around matters.

Property appraisal and condition standards

The FHA requires an appraisal by a licensed appraiser on the FHA's approved list. The appraiser checks that the home meets minimum standards for safety, soundness, and livability. The roof must not leak, the foundation must be sound, plumbing and electrical systems must work, and heating must be present.

Common issues that cause appraisal problems include peeling paint (lead paint hazard), broken windows, missing roof shingles, water damage, mold, or evidence of pests. The seller is usually responsible for fixing these issues before closing, though you can negotiate who pays. If the problems are severe, the property may not meet FHA standards at all, and the loan cannot close.

The appraisal also determines the home's value for loan purposes. If the appraised value is lower than the purchase price, you have a problem — you cannot borrow more than the home is worth. You would need to renegotiate the price, increase your down payment, or walk away.

Citizenship and legal residency

You must be a U.S. citizen or a permanent resident (green card holder) to get an FHA loan. You need a valid Social Security number. If you are a permanent resident, you will need to provide your green card or a receipt showing you have applied for one.

Temporary visa holders, undocumented immigrants, and people without a Social Security number cannot get an FHA loan. Some state and local programs exist for non-citizens, but they are separate from the federal FHA program.

Frequently Asked Questions

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

Yes, but you must wait. After a foreclosure, you need to wait three years before explore for an FHA loan. After a short sale, the wait is typically two years. The FHA may make exceptions if the foreclosure or short sale was caused by circumstances beyond your control, like a job loss or medical emergency, but you will need to document that and wait at least two years.

What if I do not have two years of work history?

Most lenders require two years of employment history, but there are exceptions. If you recently graduated or changed careers, some lenders will accept one year of history in your current job plus education or training that led to it. You will need to provide a letter from your employer confirming your position and expected income.

Can I use a co-signer to help me meet the requirements?

The FHA does not use traditional co-signers the way conventional loans do. However, if you are married, your spouse's income and credit can be included on the process. If you are not married, a non-occupant co-borrower (someone who will not live in the home) can sometimes be added, but they must meet all the same requirements and their debts count toward the ratio.

Do I need to take a homebuyer education course?

The FHA does not require it, but many lenders do. Some lenders will waive the requirement if you have owned a home before. The course is usually online, takes a few hours, and costs $50 to $150. It covers budgeting, maintenance, and what to expect during the loan process.

What happens if my income is seasonal or irregular?

If your income varies by season or project, the lender will average it over two years to find a stable number. Self-employed people and commission-based workers go through this calculation. If your income has been declining over those two years, the lender may use the lower recent year as your may have access to income.