FHA loans have four main requirements: a credit score of at least 580, a down payment of 3.5 percent, proof of steady income, and a debt-to-income ratio under 43 percent

The Federal Housing Administration does not lend money itself. Instead, FHA insures loans that banks and mortgage companies make, which lets those lenders accept borrowers with lower credit scores and smaller down payments than conventional mortgages require. To get an FHA loan, you need to meet four concrete thresholds that the lender will verify before approval.

Your credit score must be at least 580 to may have access to for the standard FHA program. Some lenders will work with scores as low as 500 if you put down 10 percent instead of 3.5 percent, but 580 is the federal floor. The lender pulls your credit report from one or more of the three major bureaus and looks at your payment history, outstanding debts, and how long you have held credit accounts.

Your down payment must be at least 3.5 percent of the home's purchase price. On a $200,000 home, that is $7,000. You can borrow this money from a family member, but you cannot borrow it from the lender or from another lender. The lender will ask where the down payment came from and may require a letter from the person who gave it to you stating it is a gift, not a loan you have to repay.

Your income must be documented and steady enough that the lender believes you can make monthly payments for 30 years. This usually means W-2 income from employment, but self-employed borrowers, retirees, and people receiving Social Security or disability payments can also document income. The lender will ask for recent pay stubs, tax returns, and sometimes a letter from your employer confirming your job is permanent.

Your debt-to-income ratio—the total of all your monthly debt payments divided by your gross monthly income—must be under 43 percent. If you earn $4,000 a month before taxes, your total monthly debts (car loans, credit cards, student loans, the new mortgage payment) cannot exceed $1,720. Some lenders will go to 50 percent if you have strong credit and savings, but 43 percent is the standard limit.

Key Takeaways

  • You need a credit score of at least 580; some lenders accept 500 if you put down 10 percent instead of 3.5 percent.
  • Your down payment must be at least 3.5 percent of the home price and must come from your own savings or a gift, not a loan.
  • You must show steady income through recent pay stubs, tax returns, or benefit statements; self-employed borrowers need two years of tax returns.
  • Your total monthly debt payments cannot exceed 43 percent of your gross monthly income, though some lenders allow up to 50 percent.
  • The lender verifies all four requirements before approval; meeting one does not mean you will meet the others.

How the lender verifies your credit score

The lender orders your credit report directly from Equifax, Experian, or TransUnion and uses the middle score if three bureaus report. Your score reflects whether you paid bills on time, how much credit you are currently using, how long your credit history is, and whether you have had collections or bankruptcies. A score of 580 means you have had some late payments or high balances, but not recent defaults or active collections.

If your score is below 580, you have two options: wait and rebuild your credit by paying all bills on time for several months, or find a co-borrower with a score of 580 or higher who will sign the mortgage with you. A co-borrower's income and debts both count toward the lender's decision, so adding someone strengthens your application only if their credit and income are stronger than yours.

How the lender verifies your income and employment

For W-2 employment, the lender requests your most recent two pay stubs and your last two years of tax returns. They may also call your employer to confirm you still work there and that your job is not temporary. If you have been at your current job for less than two years, the lender will look at your previous job history to see whether you have stable work in the same field.

Self-employed borrowers must provide two years of personal tax returns and often a profit-and-loss statement for the current year. The lender averages your income over two years to account for business fluctuation. If you recently started a business, you may not yet have two years of returns; in that case, some lenders will use your W-2 income from your previous job if you left it less than two years ago.

Retirees, Social Security recipients, and people on disability can use benefit statements as income documentation. The lender will request a current statement from the Social Security Administration or the Veterans Administration showing your monthly benefit amount. This income is treated as permanent, so you do not need to show two years of history.

How the lender calculates your debt-to-income ratio

The lender adds up all your monthly debt payments: car loans, credit cards (using the minimum payment, not the balance), student loans, child support, and the estimated mortgage payment on the home you are buying. They divide this total by your gross monthly income—the amount before taxes and deductions. The result must be 43 percent or lower.

The estimated mortgage payment includes principal, interest, property taxes, homeowners insurance, and FHA mortgage insurance. The lender calculates this using the loan amount, current interest rates, and the home's assessed value. This is why the home price and your down payment affect whether you meet the ratio: a more expensive home or a smaller down payment means a higher monthly payment, which can push you over 43 percent.

If your ratio is above 43 percent, you can lower it by paying off debts before applying, increasing your down payment, or looking at less expensive homes. Paying off a $300 car loan, for example, removes $300 from your monthly debt total and can be enough to bring you under the limit.

What happens if you do not meet one of the four requirements

If your credit score is below 580, you cannot get an FHA loan unless you add a co-borrower or wait to rebuild your score. If your down payment is less than 3.5 percent, you will need to save more or find a gift from a family member; the lender will not accept a loan for the down payment. If your income cannot be documented or is too recent, you may need to wait until you have been at your job or in business long enough to show a pattern. If your debt-to-income ratio is too high, you must pay down existing debts or find a less expensive home.

Some lenders are stricter than the federal minimums. A lender might require a 620 credit score instead of 580, or a 40 percent debt-to-income ratio instead of 43 percent. If one lender denies you, another may approve you under the same FHA rules. It is worth getting pre-approved by more than one lender to see which one will work with your situation.

What FHA mortgage insurance means for your monthly payment

FHA mortgage insurance protects the lender if you stop paying. It comes in two parts: an upfront premium (usually 1.75 percent of the loan amount, rolled into your mortgage) and an annual premium (between 0.55 and 0.80 percent of the loan amount per year, added to your monthly payment). This insurance is mandatory for all FHA loans and does not go away until you refinance into a conventional loan or pay off the mortgage.

The mortgage insurance is why your monthly payment is higher than it would be for a conventional loan with the same interest rate. On a $180,000 FHA loan, the upfront insurance adds about $3,150 to the amount you borrow, and the annual insurance adds roughly $100 to $150 per month. This cost is built into the lender's calculation of whether your debt-to-income ratio is acceptable.

Frequently Asked Questions

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

Yes, but you must wait. If your bankruptcy was discharged (closed) within the last two years, most lenders will not approve you. If it was discharged more than two years ago and you have made all payments on time since then, you can usually get an FHA loan. The lender will ask for a copy of the bankruptcy discharge papers and will look closely at your credit history after the bankruptcy to make sure you have rebuilt.

What if I have a co-signer instead of a co-borrower?

A co-signer is not the same as a co-borrower. A co-signer promises to pay if you do not, but does not own the home and does not sign the mortgage deed. FHA loans do not allow co-signers. You can have a co-borrower who signs the mortgage with you, and their income and debts both count in the lender's decision. If you need help, a co-borrower is your only option.

Do I have to be a U.S. citizen to get an FHA loan?

No. You must have a valid Social Security number or Individual Taxpayer Identification Number (ITIN), and you must be a permanent resident or have a visa that allows you to work and stay in the country long-term. The lender will verify your immigration status through the Social Security Administration. Undocumented immigrants cannot get FHA loans.

Can I use a gift for my down payment if the person giving it is not a family member?

Most lenders require the gift to come from a family member—spouse, parent, sibling, grandparent, or in-law. Some lenders allow gifts from employers or nonprofit organizations if you provide documentation. Ask the lender before you accept a gift from someone outside your family; if they will not accept it, you will need to use your own savings or find a family member to give you the money instead.

What if my income is irregular or seasonal?

If you work in a seasonal industry (construction, agriculture, retail), the lender will average your income over two years to account for slow months. If you work on commission or have variable hours, the lender will use your average income from the past two years of tax returns. You must show that you have worked in the same field for at least two years for the lender to accept averaged income.