Jaime@mrmortgage.loans
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Loan program
FHA home loans.
A government-insured mortgage built for buyers with a smaller down payment or credit that is still recovering. For a lot of renters, it is the shortest path to owning.
3.5%
minimum down
580
score for 3.5% down
1-4
unit homes
6%
seller credit toward costs
What an FHA loan is
An FHA loan is a mortgage insured by the Federal Housing Administration, part of HUD. That insurance protects the lender if a borrower stops paying, which is why lenders can approve buyers with less saved and credit that is not perfect.
You still get the loan through a mortgage professional, not from the government. It can be a 30- or 15-year fixed rate, or an adjustable rate, and it works for buying a home or refinancing one you already own.
Who it fits
- First-time buyers who have saved a smaller down payment.
- Buyers whose credit is still recovering, including after a bankruptcy or foreclosure once the waiting period has passed.
- Families buying a 2 to 4 unit property they will live in, where rent from the other units can help them qualify.
- Buyers getting help with the down payment from family or an assistance program.
The basic requirements
| Requirement | What FHA asks for |
|---|---|
| Down payment | 3.5% with a credit score of 580 or higher. 10% with a score from 500 to 579. |
| Credit score | HUD sets the floor at 500. Many lenders set their own minimum higher, so where your file goes matters. |
| Occupancy | The home must be your primary residence. You generally move in within 60 days and live there for at least a year. |
| Property | 1 to 4 units that meet FHA safety and condition standards, checked by an FHA appraisal. A condo needs an FHA-approved complex or a single-unit approval. |
| Loan amount | Up to the FHA limit set for your county each year. |
| Income and debt | Steady, documented income. FHA can allow more debt compared with income than many conventional loans when the rest of the file is strong. |
These are HUD’s baseline rules. Lenders can add their own on top, which is why the same file can get a yes in one place and a no in another.
What FHA mortgage insurance costs
Every FHA loan carries mortgage insurance, and it comes in two parts:
- An upfront premium of 1.75% of the loan amount, usually added into the loan instead of paid in cash at closing.
- An annual premium, split into your monthly payment. The rate depends on the loan amount, the term and your down payment.
With less than 10% down, the annual premium stays for the life of the loan. With 10% or more down, it ends after 11 years. Many owners refinance into a conventional loan once they have enough equity to drop mortgage insurance altogether.
FHA or conventional?
It is the question I get asked most, and the honest answer is that it depends on your credit, your down payment and the property.
| FHA | Conventional | |
|---|---|---|
| Minimum down | 3.5% | 3% for some first-time buyers, commonly 5% |
| Credit score | From 580 for 3.5% down | Usually 620 or higher |
| Mortgage insurance | Upfront and annual, often for the life of the loan | Only under 20% down, and it can come off as you build equity |
| Condos | FHA-approved complex, or a single-unit approval | The complex must meet conventional guidelines |
| Often the better fit | Lower scores or more debt | Stronger credit, especially with more down |
With strong credit, conventional is often cheaper over time because its mortgage insurance can come off. With a lower score, FHA can come out ahead. I compare both on your actual numbers before you decide.
Down payment help
FHA pairs well with California down payment assistance. I work with CalHFA programs and with Fast 100 and Fast 100+, which can cover some or all of the down payment for buyers who qualify. Program rules and funding change through the year, so ask me what is open right now.
Common questions
FHA, answered.
Yes, after a waiting period. HUD generally looks for two years after a Chapter 7 bankruptcy discharge and three years after a foreclosure, with credit re-established since. Some situations qualify sooner, so it is worth a conversation.
Yes. FHA allows the whole down payment to come from a family gift or an approved assistance program. A gift needs a signed gift letter and a paper trail showing where the money came from.
No. Anyone can use FHA as long as the home will be their primary residence. Most people can have only one FHA loan at a time.
Yes, as long as you live in one of the units. The same 3.5% minimum down applies, and rent from the other units can help you qualify.
Yes. An FHA streamline refinance can lower the rate on an existing FHA loan with less paperwork, and once you have enough equity you can refinance into a conventional loan and drop mortgage insurance.
Next step
See if FHA fits you.
A one-minute quote request is enough for me to compare FHA with your other options. Nothing here affects your credit.