FHA loans are backed by the Federal Housing Administration and priced for real-world buyers — the ones with a 620 FICO instead of a 780, the ones who need down-payment help from mom, the ones whose credit is still healing from a rough couple of years. 3.5% down. Credit down to 500 on the right file. Gift funds allowed. Written for how people actually buy.
FHA isn't a fallback — it's a purpose-built program for buyers whose files don't tick every conventional box. On the right scenario, FHA is the sharpest loan in the room.
Minimum down for FICO 580 and up. All of it can be gifted from family — no seasoning gymnastics.
500-579 FICO can qualify with 10% down and compensating factors. Not every lender does this — I do.
FHA stretches debt-to-income further than conventional will touch — room to qualify when the numbers are tight.
FHA is the country's most-used first-time-buyer loan for a reason. If any of these describe you, we should be having a conversation.
Low down, gift-fund friendly, forgiving on limited credit history. FHA was designed for this exact profile.
Recent late payments, a collection, a chapter that closed. FHA underwrites the whole story, not just the score.
2 years post-Chapter 7 · 1 year post-Chapter 13 (in some cases) · 3 years post-foreclosure. Life goes on — so does the loan.
Student loans, car payments, medical debt. FHA's DTI ceiling is higher than conventional — the loan sizes to your file.
100% of the down payment and closing costs can come from a gift. Parents, grandparents, in-laws — the paper trail is simple.
Duplexes, triplexes, and 4-units are eligible if you live in one — rental income from the other units helps you qualify.
FHA doesn't lend the money — I do, and HUD insures a portion of the loan against default. That insurance is what lets us underwrite files conventional would decline. Here's the sequence.
Standard credit, income, and assets. Gift letter if funds are coming from family — I'll draft it.
FHA has two mortgage-insurance components (UFMIP up-front, MIP monthly). I show you both baked into the payment before you commit.
HUD-approved appraiser confirms value and property condition — roof, systems, health/safety items. Cleaner homes fly through.
30-45 days typical. UFMIP is financed into the loan (no cash needed for it). Monthly MIP stays on for the life of most FHA loans.
Every scenario is different — these are the typical guardrails. When you call, I'll tell you exactly where you sit on each line.
| Guideline | Purchase | Refinance |
|---|---|---|
| Down payment | 3.5% (FICO 580+) · 10% (FICO 500-579) | N/A — up to 96.5% LTV rate/term · 80% cash-out |
| Minimum FICO | 580 standard · 500 with 10% down & compensating factors | 580 standard |
| Mortgage insurance | UFMIP 1.75% financed + monthly MIP (0.15%-0.75% annual) | Same structure |
| DTI | Flexible with strong compensating factors | Same |
| Loan limits | County-based · $524,225 base · up to $1,209,750 in high-cost counties | Same |
| Gift funds | 100% of down payment & closing costs allowed | N/A |
| Waiting periods | 2 yrs post-Ch. 7 · 3 yrs post-foreclosure · 3 yrs post-short-sale | Same |
| Occupancy | Primary residence only (must occupy within 60 days) | Primary only |
| Property types | 1-4 family · FHA-approved condo · manufactured (case-by-case) | Same |
| Streamline refi | N/A | FHA Streamline: no appraisal, minimal docs, existing FHA loan required |
FHA charges two insurance premiums: UFMIP (1.75% up-front, rolled into the loan) and MIP (a monthly amount). On loans originated after June 2013 with less than 10% down, MIP stays on for the life of the loan — you'd need to refinance out of FHA (usually into a conventional loan) to drop it. With 10%+ down, MIP falls off after 11 years. On many files, the smart play is FHA to close, then refi to conventional 24 months later once credit and equity are stronger.
Yes — with 10% down and compensating factors like strong reserves, stable employment, or manageable DTI. Not every lender goes below 580. We do. If you're in the 500-579 range, call me before you talk to anyone else — the setup on these files matters more than the score itself.
Yes — 100% of your down payment and closing costs can be a gift from an eligible donor (parent, grandparent, sibling, spouse, in-law, or documented close friend). The paperwork is a one-page gift letter plus proof the funds came from the donor's account. I draft the letter for you.
Conventional loans are underwritten to Fannie Mae / Freddie Mac guidelines — stricter credit, lower DTI, PMI that eventually cancels. FHA is government-backed with looser credit, higher DTI ceilings, lower down payments, and insurance that (on 3.5%-down files) stays for the life of the loan. FHA is often the right loan on the way to a conventional refi.
Yes — 1-4 unit properties are eligible if you live in one of the units as your primary residence. This is one of the best ways for first-time buyers to become landlords: 3.5% down on a 2-4 unit, live in one, rent the others.
If you already have an FHA loan and rates drop, the Streamline lets you refinance with minimal paperwork, no appraisal in most cases, and no income re-verification. Reduces MIP if your existing loan is older than mid-2013. One of the fastest refis in the market.
*Sub-580 FICO FHA loans require 10% down and compensating factors. Not every scenario qualifies — call to review yours.