The basic requirements for an FHA loan

To get an FHA loan, you need a steady income, a credit score of at least 580 (though some lenders require 620), and a down payment of 3.5 percent. You must be a U.S. citizen or permanent resident, have a valid Social Security number, and be at least 18 years old. The property you're buying must be your primary residence — not an investment property or vacation home — and it must meet FHA safety and structural standards.

Your debt-to-income ratio (the percentage of your monthly income that goes to debt payments) cannot exceed 50 percent, though most lenders prefer 43 percent or lower. This includes your new mortgage payment, property taxes, insurance, homeowners association fees, and any other debts you're carrying. The FHA doesn't set a maximum income limit, so higher earners can borrow too.

Key Takeaways

  • You need a credit score of at least 580, a down payment of 3.5 percent, and proof of steady income to meet the baseline FHA requirements.
  • Your total monthly debt payments (including the new mortgage) cannot exceed 50 percent of your gross monthly income, though lenders typically want to see 43 percent or less.
  • The property must be your primary residence and pass FHA inspection standards for safety, structure, and systems.
  • Recent bankruptcy, foreclosure, or late payments can disqualify you or require a waiting period before you can borrow.
  • Self-employed borrowers need two years of tax returns and may face stricter income verification than W-2 employees.

Credit score and payment history requirements

The FHA's official minimum credit score is 580, which qualifies you for the 3.5 percent down payment. If your score is between 500 and 579, you can still borrow but will need a 10 percent down payment instead. Scores below 500 disqualify you from FHA loans entirely.

Beyond the number itself, lenders look at your payment history. A bankruptcy must be at least two years old (three years if you had a Chapter 7 discharge). A foreclosure requires a three-year waiting period from the date the lender took back the property. Late payments older than two years matter less, but recent late payments — especially within the last 12 months — can cause a lender to deny you or require compensating factors like a larger down payment or lower debt ratio.

Collections accounts, charge-offs, and judgments don't automatically disqualify you, but they signal risk. Some lenders will work with you if those accounts are paid off or if you can explain what happened. Others won't. This is where shopping multiple lenders matters: their standards vary.

Income and employment verification

You must show that your income is stable and likely to continue. For W-2 employees, this means recent pay stubs (usually the last 30 days) and tax returns for the past two years. If you've been at your job for less than two years, lenders will ask for documentation of your previous employment to confirm you've worked continuously.

Self-employed borrowers face stricter scrutiny. You'll need two years of personal tax returns and two years of business tax returns (if you're a sole proprietor, these are the same document). The lender will average your income over those two years, so a recent spike in earnings won't help if your average is low. If you've been self-employed for less than two years, most lenders won't touch your application.

Other income sources — Social Security, disability, pensions, alimony, child support, rental income — count toward your total, but you'll need documentation. Social Security requires a recent statement. Rental income requires leases and proof that you've actually collected it. Alimony or child support requires a court order and evidence of regular payment.

Down payment and cash reserves

The FHA requires a minimum down payment of 3.5 percent of the purchase price if your credit score is 580 or higher. This is lower than conventional loans, which typically require 5 to 20 percent. If your score is between 500 and 579, you'll need 10 percent down.

The down payment can come from your own savings, a gift from a family member, or a grant from a nonprofit or government program. If you receive a gift, the person giving it must sign a statement confirming it's a gift and not a loan you'll repay. The FHA allows gifts to cover the entire down payment and closing costs.

Some lenders require cash reserves — money left in savings after closing — especially if your credit score is lower or your debt ratio is high. Reserves might be one to three months of mortgage payments. This isn't an FHA rule; it's a lender's own standard. Ask your lender upfront whether they require it.

Property requirements and FHA appraisal standards

The property must be your primary residence, meaning you'll live there most of the year. You can't use an FHA loan to buy a second home or investment property. The FHA also requires that the property pass an appraisal that confirms it meets minimum safety and structural standards.

The appraiser checks for major defects: a roof that's near the end of its life, foundation cracks, plumbing or electrical problems, mold, pest damage, or missing handrails. Minor cosmetic issues don't matter. If the appraiser finds problems, the seller must fix them before closing, or the deal falls through. This protects you from buying a money pit, but it also means you can't negotiate around serious issues the way you might with a conventional loan.

The property must also have a clear title, meaning no liens or claims against it other than the mortgage you're taking. A title search uncovers these before you close.

Debt-to-income ratio and how it's calculated

Your debt-to-income ratio is the sum of all your monthly debt payments divided by your gross monthly income. The FHA allows up to 50 percent, but most lenders cap it at 43 percent because they want a safety margin.

Monthly debt includes your new mortgage payment (principal, interest, taxes, insurance, and mortgage insurance), car loans, student loans, credit card minimums, personal loans, alimony, and child support. It does not include utilities, groceries, or insurance premiums you pay separately from the mortgage.

Here's an example: if you earn $5,000 gross per month and your new mortgage payment will be $1,200, plus you have a car payment of $300 and student loan payments of $200, your total debt is $1,700. That's 34 percent of your income, well within the 43 percent lender standard. If your debts totaled $2,500, you'd be at 50 percent — the FHA maximum but above what most lenders will accept.

Special situations: recent life events and exceptions

A recent divorce, job loss, or medical emergency can affect your application, but it doesn't automatically disqualify you. If you had a late payment because of a temporary hardship that's now resolved, write a brief explanation letter. Lenders call this a "letter of explanation," and it helps if you can show the problem was one-time, not a pattern.

If you're a first-time homebuyer, the FHA doesn't give you a special advantage in terms of lower requirements, but some state and local programs do. Check with your state housing finance agency to see whether you're may be able to access for down payment help or closing cost assistance.

Non-citizen permanent residents can borrow with an FHA loan if they have a valid green card and an Individual Taxpayer Identification Number (ITIN). Undocumented immigrants cannot. Borrowers with a Social Security number but no credit history can sometimes get approved if they can show a pattern of on-time rent payments or utility bills.

Frequently Asked Questions

Can I get an FHA loan if I've had a bankruptcy?

Yes, but you must wait at least two years from the discharge date (three years for Chapter 7 bankruptcy in some cases). During that waiting period, you can't borrow. After the waiting period, you can apply, but the bankruptcy will still affect your credit score and some lenders may require a larger down payment or lower debt ratio to offset the risk.

What if I'm self-employed and my income varies a lot?

Lenders average your income over two years of tax returns, so a recent spike won't help. If your average income is solid, you can still borrow. If your income is genuinely unstable, you may need to wait until you have two years of consistent earnings, or you may need a co-borrower with stable W-2 income to strengthen the application.

Do I need a perfect credit score to get approved?

No. The FHA minimum is 580, and many borrowers with scores in the 600s get approved regularly. Lower scores mean higher interest rates and stricter debt-ratio requirements, but you don't need perfect credit. If your score is below 580, you'll need a 10 percent down payment instead of 3.5 percent.

Can a family member gift me the down payment?

Yes. The gift must be documented with a signed statement from the person giving it, confirming it's a gift and not a loan. The gift can cover the entire down payment and closing costs. The person giving the gift doesn't have to be a relative, though most lenders prefer it.

What happens if the FHA appraisal finds problems with the house?

The seller must fix the problems before closing, or the deal is off. You can't close on a property that doesn't meet FHA standards. This protects you but also means you can't negotiate around major issues or accept the property "as-is" the way you might with a conventional loan.