FHA loans

Credit and down payment thresholds

FHA ties the maximum loan-to-value to the borrower's decision credit score. A score at or above 580 is eligible for maximum financing, which is where the 3.5 percent minimum comes from. Scores from 500 to 579 are limited to 90 percent loan-to-value, which means at least 10 percent down. Below 500, the loan is not eligible. Borrowers with no traditional credit can still be eligible through manual underwriting with alternative records. Lenders may set higher minimums than FHA's, so shop more than one.

Mortgage insurance

FHA charges an upfront mortgage insurance premium, typically financed into the loan, and an annual premium divided into monthly payments. HUD's Mortgagee Letter 2023-05 cut the annual premium for most new purchase loans; the rate depends on the loan amount, term and loan-to-value. For a typical 30-year loan at or under the letter's loan-amount threshold with more than 95 percent loan-to-value, the annual premium is 55 basis points, or 0.55 percent a year. How long it lasts also depends on the down payment, which is why a buyer who can put 10 percent down should price both FHA and conventional options.

Loan limits by county

FHA sets maximum loan amounts by county, using local median prices. For case numbers assigned in 2026, HUD's Mortgagee Letter 2025-23 sets the one-unit floor at $541,287 and the ceiling at $1,249,125, with higher limits for two- to four-unit properties and special limits in Alaska, Hawaii, Guam and the Virgin Islands. Your county's limit may be anywhere between the floor and the ceiling; HUD's lookup tool shows it.

Property standards and the appraisal

FHA appraisals estimate value and also check that the home meets minimum property requirements for safety, security and soundness. Problems such as peeling paint on older homes or a missing handrail may need to be fixed before closing. That protects you, but it can complicate offers on homes sold as-is. Condominiums usually need the project to be FHA-approved or to qualify through single-unit approval.

FHA or conventional?

FHA often fits buyers with lower scores or higher debt ratios, because its pricing does not rise with credit score in the way conventional mortgage insurance and loan pricing often do. Conventional loans often fit buyers with stronger credit, because private mortgage insurance can be cancelled once enough equity builds. The only reliable way to decide is to request Loan Estimates for both on the same day and compare the total cost over the years you expect to stay.

Costs to compare against other loans

An FHA loan's price has three parts beyond the interest rate: the upfront premium, the annual premium and how long the annual premium lasts. With the minimum down payment, the annual premium runs for the life of the loan. Compare that with a conventional loan's private mortgage insurance, which depends more on your credit score and can usually be cancelled as equity builds. Ask for both kinds of Loan Estimate on the same day. If your loan amount is near your county's FHA limit, check the limit first, since it decides whether FHA is available at all.

Condos need their own approval

An FHA loan on a condo depends on the building as well as the buyer. HUD keeps a searchable list of approved condominium projects, and the status and expiration date show whether the project route is open. HUD's 2019 condo rule extended project recertification from two years to three and brought back single-unit approval, which lets a lender approve one unit in a project that is not on the list.

Single-unit approval has limits. HUD's FHA Connection guidance caps FHA concentration at 10 percent of units in projects with ten or more units, and at two FHA-insured units in smaller projects. The lender documents the project with HUD's condominium questionnaire, form HUD-9991, which the association usually completes. Check the list before you make an offer, and ask the association early how quickly it returns lender questionnaires.

How to use this file

Read the FHA requirements guide first; it brings the thresholds, premiums and limits together with a worked example. Then use the guides on mortgage insurance, appraisals, 203(k) renovation loans and condo approval as they become relevant.