The basic requirements for an FHA loan

An FHA loan requires you to have a Social Security number, be at least 18 years old, and be a U.S. citizen or permanent resident. You need a valid driver's license or state ID and a steady income history — usually shown through recent pay stubs, tax returns, and W-2 forms. The lender will also check your credit report and your debt-to-income ratio, which is the percentage of your monthly income that goes toward debt payments.

You must intend to live in the property as your primary residence. FHA loans are not available for investment properties, vacation homes, or rental properties. The property itself must meet FHA standards — the lender will order an appraisal to confirm the home is safe, structurally sound, and worth at least the loan amount.

Key Takeaways

  • You need a credit score of at least 500 to 580, depending on the lender, though scores above 620 typically mean better interest rates and lower down payment requirements.
  • Your debt-to-income ratio cannot exceed 43 to 50 percent, meaning your total monthly debt payments (including the new mortgage) cannot be more than 43 to 50 percent of your gross monthly income.
  • You must have a down payment of at least 3.5 percent of the purchase price, and the FHA will charge you an upfront mortgage insurance premium and annual mortgage insurance premiums.
  • The property must be your primary residence, meet FHA safety and structural standards, and be appraised by an FHA-approved appraiser.
  • Recent bankruptcy or foreclosure does not automatically disqualify you, but waiting periods explore — typically two years after a Chapter 7 bankruptcy discharge and one year after a foreclosure.

Credit score and credit history requirements

Most lenders require a credit score of at least 580 to get an FHA loan with the standard 3.5 percent down payment. Some lenders will work with scores as low as 500, but those borrowers typically must put down 10 percent instead. A score below 500 will be difficult to place with any FHA lender.

The lender will also review your credit history for the past two years. Late payments, collections, charge-offs, and other negative marks do not automatically disqualify you, but they affect the interest rate you receive and may require explanation. If you have recent late payments — within the last 12 months — the lender may ask for a written explanation of what caused them and evidence that your situation has stabilized.

Bankruptcy and foreclosure have waiting periods. You can usually get an FHA loan two years after a Chapter 7 bankruptcy is discharged, or one year after a Chapter 13 bankruptcy if you have made all required payments on time. For foreclosure, the waiting period is typically three years, though it can be shortened to one year if the foreclosure was caused by a documented hardship like job loss or medical emergency.

Income and debt-to-income ratio limits

The FHA does not set a minimum income amount. Instead, lenders use your debt-to-income ratio — the percentage of your gross monthly income that goes toward debt. The maximum ratio is usually 43 percent, though some lenders will go up to 50 percent if you have strong compensating factors like a large down payment, high credit score, or substantial savings.

Your debt includes the new mortgage payment (principal, interest, taxes, insurance, and mortgage insurance), car loans, student loans, credit card minimums, child support, and any other monthly obligations. The lender calculates this by adding all your monthly debt payments and dividing by your gross monthly income before taxes.

Income is verified through recent pay stubs (usually the last two months), W-2 forms or tax returns for the past two years, and sometimes a letter from your employer confirming your job and salary. If you are self-employed, you will need to provide two years of tax returns and possibly a profit-and-loss statement. If you receive income from Social Security, pensions, or other sources, bring documentation of those payments as well.

Down payment and cash reserves

The FHA requires a minimum down payment of 3.5 percent of the purchase price. On a $200,000 home, that is $7,000. You do not have 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 lender will ask for a gift letter stating that the money does not need to be repaid.

Some lenders prefer to see cash reserves — money left in your bank account after closing. Reserves equal to one or two months of mortgage payments show the lender you can handle an unexpected expense without missing a payment. This is not required, but it can help if your debt-to-income ratio is close to the maximum or your credit score is lower.

Employment and income stability

The lender wants to see that your income is stable and likely to continue. If you have been at your current job for less than two years, the lender will look at your previous employment to confirm you have been working steadily. Gaps in employment of more than 30 days may require explanation.

If you changed jobs recently, the lender will verify that your new job is in the same field and pays the same or more. A career change to a lower-paying job can hurt your process. If you are in a probationary period at a new job, some lenders will not count that income until the probation ends, usually after 90 days.

If your income varies — for example, if you work on commission or receive seasonal bonuses — the lender will average your income over the past two years. Overtime and bonuses are included only if you have received them consistently for at least two years and the lender believes they will continue.

Property requirements and appraisal

The property must meet FHA Minimum Property Standards, which cover safety, soundness, and sanitation. The home must have a functioning roof, plumbing, electrical system, and heating. Major structural damage, mold, lead paint hazards, or pest infestations can cause the property to fail inspection. The lender orders an appraisal from an FHA-approved appraiser, and the appraiser will note any issues.

If the appraisal reveals problems, you have options: the seller can repair them before closing, you can negotiate a price reduction, or you can walk away. The FHA will not insure a loan on a property that does not meet its standards, so the lender cannot close without either repairs or a price adjustment.

Special situations and exceptions

Non-traditional credit history — meaning you have no credit cards or loans — does not disqualify you. The lender can use alternative credit sources like utility bills, rent payments, insurance payments, or cell phone bills to build a credit profile. You will need to provide 12 months of payment history for at least three accounts.

If you are a first-time homebuyer, the FHA does not require special training, though some lenders offer homebuyer education courses that can lower your interest rate. If you are a teacher, nurse, law enforcement officer, or work in another profession the FHA considers essential, some lenders offer slightly better terms.

If you are receiving a gift for your down payment, the gift must come from a family member or an approved source. The lender will ask for a gift letter and may verify that the money actually came from that source. The gift cannot be a loan in disguise — it must be a true gift with no repayment expected.

Frequently Asked Questions

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

Yes. The waiting period is typically three years from the date the foreclosure was completed, though it can be shortened to one year if you can document that the foreclosure resulted from a specific hardship like job loss or serious illness. You will need to explain what happened and show that your finances have stabilized since then.

What if my debt-to-income ratio is above 43 percent?

Some lenders will go up to 50 percent if you have compensating factors — a higher credit score, larger down payment, substantial savings, or lower housing costs relative to your income. Contact multiple lenders, as their standards vary. If no lender will work with you, paying down debt before explore can lower your ratio.

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

No. Anyone who meets the credit, income, and property requirements can get an FHA loan, regardless of whether they have owned a home before. The FHA does not restrict loans to first-time buyers.

Can I use a co-signer or co-borrower on an FHA loan?

Yes. A co-borrower (someone who will be on the deed and the mortgage) or a co-signer (someone who guarantees the loan but is not on the deed) can help if your income or credit is weak. Both the borrower and co-borrower must meet FHA requirements, and both incomes and debts are counted in the debt-to-income calculation.

What happens if the appraisal comes back lower than the purchase price?

The FHA will not insure a loan for more than the appraised value. If the appraisal is lower than the purchase price, the seller can lower the price, you can pay the difference in cash, or you can walk away. The lender cannot close the loan at the original price.