What we verified in “FHA loan: down payment, insurance, limits and who qualifies”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. According to the CFPB, FHA loans are loans from private lenders that are regulated and insured by the Federal Housing Administration (FHA), a government agency that does not lend the money directly; they allow down payments as low as 3.5 percent, allow lower credit scores than most conventional loans and have a maximum loan amount that varies by county; mortgage insurance is required on all of them; for borrowers with good credit and a medium (10-15 percent) down payment they tend to cost more than conventional loans, and for borrowers with lower scores or a smaller down payment they can often be the cheapest option; there are no hard-and-fast rules, so ask lenders for quotes on both options and compare total costs.

   Sources 1 · FHA loans (page last modified Jun. 30, 2025): 'loans from private lenders that are regulated and insured by the Federal Housing Administration (FHA)'; 'The FHA doesn’t lend the money directly'; 'Allow for down payments as low as 3.5 percent'; 'Allow lower credit scores than most conventional loans'; 'Have a maximum loan amount that varies by county'; 'For borrowers with good credit and a medium (10-15 percent) down payment, FHA loans tend to be more expensive than conventional loans'; 'For borrowers with lower credit scores or a smaller down payment, FHA loans can often be the cheapest option'; 'there are no hard-and-fast rules'; 'ask lenders for quotes for both options and compare total costs'; 'Mortgage insurance is required for all FHA loans' · Checked October 17, 2026

2. According to the CFPB, FHA provides mortgage insurance to FHA-approved lenders to protect them against losses if the homeowner defaults; the cost of that insurance is passed along to the homeowner; the standards for qualifying are generally more flexible than for conventional loans; FHA is part of HUD, which takes calls at (800) 225-5342 and provides a list of qualified FHA lenders.

   Sources 2 · What is an FHA loan? (last reviewed Feb. 2, 2024): 'FHA provides mortgage insurance to FHA-approved lenders to protect these lenders against losses if the homeowner defaults on the loan'; 'The cost of the mortgage insurance is passed along to the homeowner'; 'The standards for qualifying for these loans are generally more flexible than for conventional loans'; 'The FHA is part of the United States Department of Housing and Urban Development (HUD)'; 'call HUD at (800) 225-5342'; 'HUD also provides a list of qualified FHA lenders' · Checked October 17, 2026

3. According to HUD Handbook 4000.1, for FHA to insure the maximum mortgage amount the borrower must make a Minimum Required Investment (MRI) of at least 3.5 percent of the Adjusted Value; on a purchase, the Adjusted Value is the lesser of the purchase price less any inducements to purchase or the property value; the maximum loan-to-value (LTV) on a purchase is 96.5 percent of the Adjusted Value; and the total mortgage amount may be increased by the financed upfront premium (UFMIP).

   Sources 3 · Handbook 4000.1 (issued August 12, 2026), II.A.2.a, pp. 177–178: 'For purchase transactions, the Adjusted Value is the lesser of'; 'purchase price less any inducements to purchase'; 'The total mortgage amount may be increased by the financed UFMIP amount'; 'Minimum Required Investment (MRI) of at least 3.5 percent of the Adjusted Value'; II.A.2.b.ii, p. 180: 'For purchase transactions, the maximum LTV is 96.5 percent of the Adjusted Value' · Checked October 17, 2026

4. According to HUD Handbook 4000.1, the Minimum Decision Credit Score (MDCS) is the score on the credit report when all scores are the same; with three scores it is the median, with two different scores the lower one; with several borrowers the lowest MDCS of all counts; at 580 or above the borrower is eligible for maximum financing; from 500 to 579 the loan is limited to a maximum LTV of 90%; below 500 the borrower is not eligible; and borrowers with non-traditional or insufficient credit histories are eligible for maximum financing but must be manually underwritten.

   Sources 3 · Handbook 4000.1, II.A.1.b.ii(A)(3), pp. 151–152: 'Where three scores are reported, the median score is the MDCS'; 'Where two differing scores are reported, the MDCS is the lowest score'; 'select the lowest MDCS for all Borrowers'; 'The Borrower is not eligible for FHA-insured financing if the MDCS is less than 500'; II.A.2.b.i, p. 179: 'at or above 580 eligible for maximum financing'; 'between 500 and 579 limited to a maximum LTV of 90%'; 'Borrowers with non-traditional or insufficient credit histories are eligible for maximum financing but must be underwritten using the procedures in Manual Underwriting' · Checked October 17, 2026

5. According to HUD Handbook 4000.1, on a manually underwritten loan the maximum ratio of the total mortgage payment to effective income (PTI) and of total fixed payments to effective income (DTI) are set in a matrix; borrowers with a score below 580 or no credit score may not exceed 31/43.

   Sources 3 · Handbook 4000.1, II.A.5, 'viii. Approvable Ratio Requirements (Manual)', p. 359: 'The maximum Total Mortgage Payment to Effective Income Ratio (PTI) and Total Fixed Payments to Effective Income Ratio, or DTI, applicable to manually underwritten'; 'Scores below 580, or with no credit score may not exceed'; '31/43 ratios.' · Checked October 17, 2026

6. According to HUD Handbook 4000.1, the borrower's Minimum Required Investment may not come from the seller, from any other person or entity who financially benefits from the transaction, or from anyone they reimburse; a gift is a contribution of cash or equity with no expectation of repayment, and it may come from the borrower's family member, employer or labor union, a close friend with a clearly defined and documented interest in the borrower, a charitable organization, or a governmental agency or public entity with a homeownership assistance program for low- or moderate-income families or first-time homebuyers.

   Sources 3 · Handbook 4000.1, II.A.4, Underwriting the Borrower Using the TOTAL Mortgage Scorecard, 'Source Requirements for the Borrower’s Minimum Required Investment', p. 254: 'the funds for the Borrower’s MRI must not come from'; 'the seller of the Property'; 'any other person or entity who financially benefits from the transaction'; '(F) Gifts (Personal and Equity)', pp. 258–259: 'contributions of cash or equity with no expectation of repayment'; 'the Borrower’s Family Member'; 'the Borrower’s employer or labor union'; 'a close friend with a clearly defined and documented interest in the'; 'a charitable organization'; 'a governmental agency or public entity that has a program providing' · Checked October 17, 2026

7. According to HUD Handbook 4000.1, interested parties (sellers, real estate agents, builders, lenders and others with an interest in the transaction) may contribute up to 6 percent of the sales price toward the borrower's origination fees, other closing costs, prepaid items and discount points; contributions above 6 percent are considered an inducement to purchase; and these contributions may not be used for the Minimum Required Investment.

   Sources 3 · Handbook 4000.1, II.A.4, '(G) Interested Party Contributions (TOTAL)', pp. 260–261: 'Interested Parties refer to sellers, real estate agents, builders, developers'; 'Interested Parties may contribute up to 6 percent of the sales price toward the'; 'Interested Party Contributions exceeding 6 percent are considered an'; 'Interested Party Contributions may not be used for the Borrower’s MRI.' · Checked October 17, 2026

8. According to HUD Mortgagee Letter 2023-05, for case numbers endorsed on or after March 20, 2023 the upfront premium is 175 basis points (1.75%) of the base loan amount; the annual premium on a loan of more than 15 years with a base loan amount at or below the threshold is 50 basis points for 11 years at an LTV of 90% or less, 50 for the mortgage term above 90% up to 95%, and 55 for the mortgage term above 95%; above the threshold it is 70 and 75; loans of 15 years or less pay 15, 40 or 65; and the letter set the base loan amount threshold at the national conforming loan limit.

   Sources 4 · Mortgagee Letter 2023-05 (February 22, 2023): 'effective for case numbers endorsed on or after March 20, 2023'; 'amends the Base Loan amount threshold used to establish MIP rates to the national conforming loan limit'; Appendix 1.0, p. 2: 'All Mortgages: 175 Basis Points (bps) (1.75%) of the Base Loan Amount'; p. 3, 'Mortgage Term of More Than 15 Years': '≤ 90.00% 50 11 years'; '> 90.00% but ≤ 95.00% 50 Mortgage term'; '> 95.00% 55 Mortgage term'; '> 95.00% 75 Mortgage term'; 'Mortgage Term of Less than or Equal to 15 Years'; '> 90.00% 65 Mortgage term' · Checked October 17, 2026

9. According to HUD Handbook 4000.1, the periodic MIP is an annual premium payable monthly; its amount is based on the LTV, the base loan amount and the term of the mortgage; and the rate and the length of the premium vary by term, base loan amount and LTV, as the MIP chart shows.

   Sources 3 · Handbook 4000.1, II.A.2, 'ii. Annual (or Periodic) Mortgage Insurance Premium', pp. 182–183: 'The periodic MIP is an annual MIP that is payable monthly'; 'The amount of the annual MIP is based on the LTV ratio, Base Loan Amount and the term of the Mortgage'; 'The MIP rate and duration of the MIP assessment period vary by mortgage term, Base' · Checked October 17, 2026

10. According to the CFPB, mortgage insurance of any kind protects the lender, not you, if you fall behind, and it increases the cost of your loan; on an FHA loan the premiums are paid to FHA, are required on all FHA loans and cost the same no matter your credit score, with only a slight increase for down payments under five percent; they include an upfront cost, paid with your closing costs, and a monthly cost included in your payment; if you do not have the cash for the upfront fee you can roll it into the loan, which increases the loan amount and the overall cost; and private mortgage insurance (PMI) on a conventional loan varies with the down payment and credit score but is generally cheaper than FHA's for borrowers with good credit.

    Sources 6 · What is mortgage insurance and how does it work? (last reviewed Aug. 28, 2026): 'Mortgage insurance, no matter what kind, protects the lender – not you'; 'it increases the cost of your loan'; 'your mortgage insurance premiums are paid to the FHA'; 'FHA mortgage insurance is required for all FHA loans'; 'It costs the same no matter your credit score, with only a slight increase in price for down payments less than five percent'; 'both an upfront cost, paid as part of your closing costs , and a monthly cost, included in your monthly payment'; 'you are allowed to roll the fee into your mortgage instead of paying it out of pocket'; 'your loan amount and the overall cost of your loan increases'; 'Private mortgage insurance (PMI) rates vary by down payment amount and credit score but are generally cheaper than FHA rates for borrowers with good credit' · Checked October 17, 2026

11. According to the CFPB, FHA and VA loans have different requirements from PMI for removing mortgage insurance, and questions about mortgage insurance on an FHA or VA loan go to your servicer.

    Sources 7 · When can I remove private mortgage insurance (PMI) from my loan? (last reviewed Aug. 28, 2026): 'Mortgages through the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA) have different requirements'; 'For answers to questions about mortgage insurance on an FHA or VA loan, contact your servicer' · Checked October 17, 2026

12. According to HUD Handbook 4000.1, an FHA-insured mortgage cannot exceed the Nationwide Mortgage Limits; under most programs the maximum is the lesser of the limit for the area or a percentage of the Adjusted Value; the National Housing Act establishes the limits; they are calculated from median house prices; they are set by metropolitan area and county; FHA publishes updated limits for each calendar year; and they are set at or between the low-cost area and high-cost area limits.

    Sources 3 · Handbook 4000.1, II.A.2.a, Maximum Mortgage Amounts (01/01/2026), pp. 177–178: 'A Mortgage that is to be insured by FHA cannot exceed the Nationwide Mortgage Limits'; 'the maximum Mortgage is the lesser of the Nationwide Mortgage Limit for the area, or a percentage of the Adjusted Value'; 'The National Housing Act establishes the maximum Mortgage limits'; 'Mortgage limits are calculated based on the median house prices in accordance with the'; 'set by Metropolitan Statistical Area'; 'FHA publishes updated limits effective for each calendar year'; 'These limits will be set at or between the low-cost area and high-cost area limits based on the median' · Checked October 17, 2026

13. Under the National Housing Act (12 U.S.C. §1709(b)(2)), an FHA loan on a one-unit home may not exceed the lesser of 115 percent of the area's median one-family house price or 150 percent of the limit set under section 1454(a)(2) of the same title, and the limit may not be less than 65 percent of that figure; it also may not exceed 100 percent of the appraised value.

    Sources 8 · 12 U.S.C. §1709(b)(2)(A)–(B): 'in the case of a 1-family residence, 115 percent of the median 1-family house price in the area'; '150 percent of the dollar amount limitation determined under the sixth sentence of such section 1454(a)(2)'; '65 percent of the dollar amount limitation determined under the sixth sentence of such section 1454(a)(2)'; 'not to exceed 100 percent of the appraised value of the property' · Checked October 17, 2026

14. According to the CFPB, you can check your county's FHA limit with a tool on HUD's website (limit type 'FHA Forward', the current calendar year, the 'One-Family' column for a one-unit home); for a home with several units, such as a duplex where you live in one unit and rent the other, the limits are higher; but for an FHA loan the building must have no more than four units and you must buy the entire building.

    Sources 9 · What are the FHA loan limits for my county? (last reviewed Jan. 2, 2025): 'You can check the FHA mortgage loan limits in your county by using a tool on the Department of Housing and Urban Development (HUD) website'; 'Be sure the “Limit Type” drop-down is set to “FHA Forward,”'; 'If you are purchasing a home with multiple units'; 'the loan limits are higher'; 'the building must have no more than four units and you must purchase the entire building' · Checked October 17, 2026

15. According to HUD Handbook 4000.1, the appraiser makes a preliminary check that the property meets HUD's Property Acceptability Criteria, which include the Minimum Property Requirements (MPR: that all homes insured by FHA be safe, sound and secure) and the Minimum Property Standards (MPS: safety and soundness requirements for new construction); when a property does not comply, the appraiser notes all repairs needed and the estimated cost to cure; when defective conditions exist and correction is not feasible, the lender must reject the property, and it may approve a property only after confirming that all reported defects have been corrected.

    Sources 3 · Handbook 4000.1, II.A.3.a, Property Acceptability Criteria, p. 184: 'When defective conditions exist and correction is not feasible, the'; 'Mortgagee must reject the Property'; 'The Mortgagee may only approve a Property after'; 'Minimum Property Requirements refer to general requirements that all homes insured by'; 'FHA be safe, sound, and secure'; 'Minimum Property Standards refer to regulatory requirements relating to the safety,'; 'the Appraiser must note all repairs necessary' · Checked October 17, 2026

16. According to HUD Handbook 4000.1, defective conditions are defective construction, evidence of continuing settlement, excessive dampness, leakage, decay, termites, environmental hazards or other conditions affecting the health and safety of occupants or the soundness of the dwelling; and when the appraiser cannot determine that a home meets the requirements, an inspection by a qualified individual or entity may be required, for example for standing water against the foundation or excessively damp basements, hazardous materials, faulty electrical, plumbing or heating/cooling systems, evidence of possible structural failure, evidence of possible pest infestation, or leaking or worn-out roofs.

    Sources 3 · Handbook 4000.1, II.D.3, 'iii. Determination of Defective Conditions' and 'iv. Inspection by a Qualified Individual or Entity', p. 805: 'Defective Conditions refer to defective construction, evidence of continuing'; 'excessive dampness, leakage, decay, termites, environmental hazards'; 'standing water against the foundation and/or excessively damp basements'; 'faulty or defective mechanical systems (electrical, plumbing or heating/cooling)'; 'evidence of possible pest infestation'; 'leaking or worn-out roofs' · Checked October 17, 2026

17. According to HUD Handbook 4000.1, lenders must give prospective homebuyers form HUD-92564-CN, 'For Your Protection: Get a Home Inspection', at first contact, whether for prequalification, preapproval or the initial application.

    Sources 3 · Handbook 4000.1, II.A.1, Origination/Processing, 'HUD Required Disclosures', p. 139: 'Mortgagees are required to provide form HUD-92564-CN, For Your Protection:'; 'Get a Home Inspection, to prospective homebuyers at first contact, be it for pre-' · Checked October 17, 2026

18. According to HUD Handbook 4000.1, a principal residence is the dwelling where the borrower maintains or will maintain their permanent home for most of the calendar year, and a person may have only one; at least one borrower must occupy the property within 60 days of signing the security instrument and intend to keep living there for at least one year; FHA will not insure more than one property as a borrower's principal residence, with exceptions, nor a loan designed to obtain investment properties.

    Sources 3 · Handbook 4000.1, II.A.1, 'iii. Occupancy Types', '(A) Principal Residence', p. 159: 'A person may have only one Principal Residence at any one time'; 'At least one Borrower must occupy the Property within 60 Days of signing the'; 'security instrument and intend to continue occupancy for at least one year'; 'FHA will not insure more than one Property as a Principal Residence for any'; 'as a vehicle for obtaining Investment Properties' · Checked October 17, 2026

19. According to HUD Mortgagee Letter 2025-09, which must be applied to FHA case numbers assigned on or after May 25, 2025, HUD removed the non-permanent resident sections in their entirety, so non-permanent residents are no longer eligible; a borrower with lawful permanent resident status may be eligible on the same requirements, terms and conditions as a U.S. citizen, and the file must include evidence of lawful permanent residence, which USCIS provides; citizens of the Federated States of Micronesia, the Republic of the Marshall Islands or the Republic of Palau may also be eligible on the same terms; and a Social Security card is not enough to prove immigration or work status.

    Sources 5 · Mortgagee Letter 2025-09, Revisions to Residency Requirements (March 26, 2025): 'must be implemented for FHA case numbers assigned on or after May 25, 2025'; 'removes the Non-permanent Residents sections in its entirety'; 'eliminating eligibility for non-permanent resident Borrowers'; 'A Borrower with lawful permanent resident status may be eligible'; 'the same requirements, terms, and conditions as those for U.S. citizens'; 'The mortgage file must include evidence of lawful permanent residence'; 'Micronesia, the Republic of the Marshall Islands, or the Republic of Palau'; 'A Social Security card is not sufficient to prove immigration' · Checked October 17, 2026

20. According to HUD Handbook 4000.1, U.S. citizenship is not required; each borrower must give the lender evidence of a valid Social Security number (SSN), with exceptions such as people employed by the World Bank or a foreign embassy; and the lender validates the SSN and examines original pay stubs, W-2 forms, tax returns obtained from the IRS or other documents it relied on to underwrite the loan.

    Sources 3 · Handbook 4000.1, II.A.1.b.ii(A)(1) and (8), pp. 151–153: 'Each Borrower must provide evidence of their valid SSN to the Mortgagee.'; 'Individuals employed by the World Bank, a foreign embassy or equivalent'; 'examining the Borrower’s original pay stubs; IRS Form W-2s,'; 'U.S. citizenship is not required for Mortgage eligibility.' · Checked October 17, 2026

21. According to HUD Handbook 4000.1, all occupying and non-occupying borrowers and co-borrowers must take title, be obligated on the note and sign all security instruments; co-signers are liable for the debt and sign the note but do not hold an ownership interest; and non-occupying co-borrowers or co-signers must be U.S. citizens or have a principal residence in the U.S.

    Sources 3 · Handbook 4000.1, II.A.1.b.ii(A)(4)–(6), p. 152: 'all occupying and non-occupying Borrowers and co-Borrowers'; 'must take title to the Property in their own name or a living trust at settlement'; 'Co-signers are liable for the debt and therefore, must sign the Note'; 'Non-occupying co-Borrowers or Co-signers must either be United States (U.S.)'; 'citizens or have a Principal Residence in the U.S.' · Checked October 17, 2026

22. According to the CFPB, the Loan Estimate is a three-page form you receive after applying for a mortgage; the lender must provide it within three business days of receiving your application; all lenders use the same standard form, which makes comparing easier; and receiving one does not mean the loan is approved.

    Sources 10 · What is a Loan Estimate? (last reviewed Aug. 9, 2024): 'a three-page form that you receive after applying for a mortgage'; 'within three business days of receiving your application'; 'All lenders are required to use the same standard Loan Estimate form'; 'the lender has not yet approved or denied your loan application' · Checked October 17, 2026

23. According to the CFPB, many states, local governments and nonprofits offer programs to make homeownership more affordable, many focused on low- and moderate-income families buying their first home, and many offer down payment assistance that can be used with a regular FHA or conventional loan.

    Sources 11 · Special loan programs, 'State and local programs': 'Many states, local governments, and nonprofits offer programs to make homeownership more affordable'; 'Many of these programs focus on low- and moderate-income families buying their first home'; 'Many programs offer down payment assistance that can be used with a regular FHA or conventional loan' · Checked October 17, 2026

24. According to the Justice Department's Executive Office for Immigration Review (EOIR), only certain people can represent you, including validly licensed attorneys and accredited representatives; notarios, document preparers, immigration consultants and travel agents are not allowed to practice law, give you legal advice or tell you whether you are eligible for immigration relief.

    Sources 12 · Can Someone Represent You Before EOIR?: 'Those include validly licensed attorneys and accredited representatives'; 'Notarios , document preparers, immigration consultants, and travel agents are not allowed to practice law'; 'They cannot give you legal advice'; 'tell you if you are eligible for immigration relief' · Checked October 17, 2026

25. According to the CFPB, HUD-approved housing counselors advise on buying a home, renting, defaults and credit, and can offer independent advice about whether a particular set of mortgage loan terms fits your objectives, often at little or no cost.

    Sources 13 · Find a Housing Counselor: 'Housing counselors throughout the country can provide advice on buying a home, renting, defaults, forbearances, foreclosures, and credit issues'; 'whether a particular set of mortgage loan terms is a good fit based on your objectives'; 'often at little or no cost to you' · Checked October 17, 2026