FHA credit score and down payment requirements
FHA sets two credit tiers. Borrowers with a score of 580 or above can put down as little as 3.5% of the purchase price. Borrowers scoring between 500 and 579 must put down at least 10%. Below 500, the programme is unavailable.
These are FHA's own floors, not the lender's. Most lenders apply overlays, which are stricter internal standards layered on top of the agency minimum, and it is common to see lenders requiring 600 or 620 even for an FHA loan. If one lender declines you, another with lighter overlays may not.
The down payment can come from your own savings, a documented gift from a family member, or an approved down payment assistance programme, which is a meaningful advantage over conventional loans with tighter sourcing rules.
How FHA loan limits work
FHA does not lend a limitless amount. Each county has a maximum insurable loan amount, calculated as a percentage of the FHFA conforming loan limit and set annually. The floor, which applies to most lower-cost counties, is 65% of the conforming limit. The ceiling, applied in designated high-cost areas, is 150%. Alaska, Hawaii, Guam and the U.S. Virgin Islands use special higher limits.
To make the mechanism concrete: with a 2025 baseline conforming limit of $806,500, the FHA floor for a one-unit property worked out to $524,225 and the ceiling to $1,209,750. Limits are also higher for two-, three- and four-unit properties. Because these figures are reset every year and vary county by county, always confirm the current number for your specific county using HUD's official lookup tool before assuming a property qualifies.
FHA mortgage insurance: two premiums, not one
Every FHA loan carries two separate mortgage insurance charges, and both matter to your monthly cost:
- Upfront MIP (UFMIP): 1.75% of the base loan amount, charged at closing. Most borrowers finance it into the loan rather than paying cash, which means you begin the loan owing more than the purchase price minus your down payment.
- Annual MIP: charged monthly despite the name, calculated as a percentage of the average outstanding balance. The rate depends on loan size, loan-to-value ratio and term; for a typical 30-year loan with the minimum down payment it has recently sat around 0.55%.
The rule that decides whether MIP ever goes away
This is the single most consequential detail of the programme, and it hinges on your original down payment. If you put down less than 10%, annual MIP remains for the entire life of the loan. If you put down 10% or more, MIP is removed after 11 years.
FHA mortgage insurance does not behave like conventional PMI. Under the Homeowners Protection Act, conventional PMI must be cancelled automatically once the balance reaches 78% of the original value, and you can request removal at 80%. FHA has no such cancellation for minimum-down borrowers; paying the balance down does not end the premium.
The practical consequence is that many FHA borrowers refinance into a conventional loan once they have accumulated 20% equity, purely to shed the permanent premium. Factor that likely future refinance, and its closing costs, into your decision.
FHA versus conventional: which actually costs less
FHA typically wins on accessibility and loses on long-run cost. With a credit score in the low 600s and 3.5% down, FHA is often the only realistic path to approval and may carry a lower base rate than a conventional loan priced for the same credit profile.
With a score above roughly 700 and at least 5% down, conventional lending usually wins. Conventional PMI is priced on credit score and can be considerably cheaper for strong borrowers, it requires no upfront premium equivalent to UFMIP, and critically it can be cancelled. Run both scenarios in the calculator above by switching the loan type, and compare total monthly outflow as well as the mortgage insurance line.
Property condition standards
FHA appraisals assess minimum property requirements as well as value. The appraiser checks safety, security and structural soundness: peeling paint on pre-1978 homes, missing handrails, faulty wiring, roof condition and non-functioning systems can all trigger required repairs before closing. Distressed and as-is properties frequently fail these checks, which is worth knowing before you make an offer with FHA financing.
Frequently asked questions
What credit score do I need for an FHA loan?
FHA itself allows 580 for a 3.5% down payment and 500 for a 10% down payment. Individual lenders commonly require higher scores, often 620, through their own overlays, so the score you need in practice depends on the lender.
Can FHA mortgage insurance be removed?
Only if your original down payment was 10% or more, in which case it ends after 11 years. Borrowers who put down less than 10% carry the annual premium for the life of the loan and generally have to refinance into a conventional mortgage to escape it.
How much is FHA upfront mortgage insurance?
1.75% of the base loan amount. On a $300,000 loan that is $5,250, which most borrowers finance into the mortgage rather than paying at closing.
What is the FHA loan limit in my county?
It varies by county and by the number of units, and it is reset each year. The floor is 65% and the ceiling 150% of the FHFA conforming loan limit. Look up your specific county in HUD's official FHA mortgage limits tool for the current year's figure.
Can I use an FHA loan for an investment property?
No. FHA financing requires you to occupy the property as your principal residence, generally within 60 days of closing. You can buy a two- to four-unit property with an FHA loan and rent out the other units, provided you live in one of them.
Reference sources
Related calculators
How this estimate is built
Principal and interest come from the standard amortization formula, worked through in full on the formula reference page. Property tax, insurance, PMI and loan-program figures layer on top from published assumptions — each one sourced, dated and listed on the methodology page. Every result here is an estimate built from public data, not a quote: confirm the specifics with a lender before relying on it.
For developers
This calculation is also available as a REST API and through an MCP server, both running the same engine as this page — so the figures match by construction rather than by convention. No key required.