FHA loans require a minimum down payment of 3.5 percent of the purchase price in 2026

The Federal Housing Administration (FHA) has kept the minimum down payment at 3.5 percent for years, and there is no announced change for 2026. This means on a $300,000 home, your down payment would be $10,500. The remaining balance becomes your mortgage, which you'll repay over 15, 20, or 30 years depending on your loan term.

The 3.5 percent requirement applies to owner-occupied single-family homes, townhouses, and condominiums. FHA loans are designed for borrowers who have limited savings or a shorter credit history than conventional loan programs require. Because the down payment is lower than most conventional loans (which typically start at 5 percent), FHA borrowers must pay mortgage insurance premiums to protect the lender if you stop paying.

Key Takeaways

  • FHA loans require a 3.5 percent down payment on the purchase price, with no change expected for 2026.
  • You must also pay an upfront mortgage insurance premium (typically 1.75 percent of the loan amount) at closing or rolled into your mortgage.
  • Annual mortgage insurance premiums continue for the life of the loan if your down payment is 3.5 percent, adding to your monthly payment.
  • Your credit score must be at least 580 to may have access to for the 3.5 percent down payment option; scores below 580 require a larger down payment.
  • The property must be your primary residence, and you cannot use an FHA loan to buy investment properties or vacation homes.

How the 3.5 percent down payment works in practice

When you put down 3.5 percent, you are borrowing 96.5 percent of the home's price. On a $300,000 purchase, that $10,500 down payment means you owe $289,500 to the lender. The lender then requires mortgage insurance because the loan-to-value ratio is high.

The upfront mortgage insurance premium (UFMIP) is charged at closing and equals 1.75 percent of the base loan amount. On that $289,500 loan, the UFMIP would be approximately $5,066. Most borrowers roll this into the loan rather than pay it in cash, which means you finance the insurance cost and pay interest on it over the life of the loan. This increases your total monthly payment.

Beyond the upfront premium, you also pay an annual mortgage insurance premium (MIP) each month as part of your mortgage payment. The annual rate depends on your loan amount and loan term, but typically ranges from 0.55 percent to 0.80 percent of the loan balance per year. This monthly cost continues for the entire loan if your down payment was 3.5 percent.

Credit score requirements for the 3.5 percent option

To use the 3.5 percent down payment, your credit score must be at least 580. If your score is between 500 and 579, you can still get an FHA loan, but you must put down 10 percent instead of 3.5 percent. The higher down payment reduces the lender's risk and is why FHA allows it for lower credit scores.

Your credit score is one of several factors the lender reviews. They also look at your debt-to-income ratio (how much you owe monthly compared to your gross income), your employment history, and whether you have any recent late payments or collections. An FHA loan is more forgiving than a conventional loan on credit history, but you still need to show you can manage debt responsibly.

Debt-to-income limits and income verification

FHA lenders typically allow a debt-to-income ratio up to 43 percent, though some lenders go to 50 percent in certain cases. Your debt-to-income ratio is calculated by dividing your total monthly debt payments (mortgage, car loans, credit cards, student loans, child support) by your gross monthly income. On a $5,000 monthly gross income, a 43 percent ratio means your total monthly debts cannot exceed $2,150.

Your new mortgage payment (including principal, interest, taxes, insurance, and mortgage insurance) counts toward this calculation. The lender will ask for recent pay stubs, tax returns, and bank statements to verify your income and savings. If you are self-employed, you may need to provide two years of tax returns and possibly a profit-and-loss statement.

What property types may have access to for FHA loans

FHA loans are limited to owner-occupied primary residences. You cannot use an FHA loan to buy a vacation home, investment property, or rental unit. The property must be where you plan to live most of the time.

Single-family detached homes, townhouses, and condominiums all may have access to, but condos have additional requirements. The condominium project must be FHA-approved, which means the project meets certain standards for owner occupancy and financial stability. Not all condos are FHA-approved, so you will need to ask the seller or real estate agent whether the property qualifies.

Manufactured homes (mobile homes) can may have access to for FHA loans if they meet specific standards, including being built after June 15, 1976, and meeting HUD construction codes. The land must also be owned, not leased.

How mortgage insurance premiums affect your total cost

Mortgage insurance is a significant part of FHA loan costs. On a $300,000 home with a 3.5 percent down payment and a 30-year loan at 7 percent interest, your principal and interest payment might be around $1,920 per month. Add property taxes, homeowners insurance, and mortgage insurance, and your total payment could easily exceed $2,400 to $2,600 per month depending on your location and insurance costs.

The mortgage insurance premium is not optional and does not go away unless you refinance into a conventional loan later. Some borrowers refinance after building equity or improving their credit score to remove the mortgage insurance and lower their monthly payment. However, refinancing involves closing costs and a new application process, so it only makes financial sense if you plan to stay in the home long enough to recoup those costs.

Down payment assistance programs and gift funds

Some borrowers combine the FHA 3.5 percent down payment with down payment assistance programs offered by state housing agencies, nonprofits, or employers. These programs may cover part or all of your down payment, reducing the amount you need to save. However, FHA has rules about gift funds: money given to you by family members must be documented with a gift letter stating it does not need to be repaid.

Down payment assistance from government programs or nonprofits is treated differently than family gifts. Some assistance is a grant (you do not repay it), while other programs are forgivable loans (you repay it only if you sell or refinance within a certain period). Ask your lender which programs are available in your state and whether they affect your loan terms or interest rate.

Frequently Asked Questions

Can I put down less than 3.5 percent on an FHA loan?

No. The FHA minimum down payment is 3.5 percent for borrowers with a credit score of 580 or higher. If your score is below 580, you must put down 10 percent. There is no option to go lower than these amounts.

Does the mortgage insurance premium ever go away?

If your down payment is 3.5 percent, the annual mortgage insurance premium stays for the life of the loan. If you put down 10 percent or more, the mortgage insurance premium can be removed after 11 years if you have paid on time. Refinancing into a conventional loan is another way to remove it, but you will need to meet conventional loan requirements and pay closing costs.

What if I have a lower credit score but want to buy a home?

If your credit score is between 500 and 579, you can still get an FHA loan, but you must put down 10 percent instead of 3.5 percent. Some lenders may also require a co-signer or ask for a letter explaining any negative credit events. Working with an FHA-approved lender who has experience with lower credit scores can help you understand your options.

Can I use an FHA loan to buy a second home or investment property?

No. FHA loans are only for primary residences where you will live most of the time. You cannot use an FHA loan for vacation homes, rental properties, or investment real estate. If you want to buy a second property, you would need a conventional loan or a different loan type designed for investment properties.

How long does it take to get approved for an FHA loan?

FHA approval typically takes 30 to 45 days from application to closing, though it can be faster or slower depending on how quickly you provide documents and how busy the lender is. The lender will order an appraisal, verify your employment and income, and review your credit. Having all your financial documents ready before you apply can speed up the process.