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A Smaller Down Payment
Eligible buyers may purchase with as little as 3.5% down. Your down payment is one part of the plan; closing costs, the full payment, and savings after the move matter too.
Home Purchase
FHA Loans
Buying a home should start with a clear understanding of your options. FHA financing may offer a practical path with a smaller down payment and flexible credit guidelines. We help you compare the full payment, cash needed, and conventional alternatives so you can choose with confidence.
Helping qualified buyers in Texas, Florida, Minnesota, and Colorado.
Start With the Basics
How an FHA Loan Works
An FHA loan is a mortgage from a lender that is insured by the Federal Housing Administration. That insurance helps lenders offer more flexible qualification options, while adding costs you should understand before choosing a loan.
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A Review of Your Full Financial Picture
FHA can offer flexibility for some credit histories. Lenders also review documented income, monthly debts, available funds, and the property before making an approval decision.
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For the Home You Plan to Live In
FHA purchase financing is for a primary residence. You do not have to be a first time buyer, and eligible properties can include more than a single family home.
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Mortgage Insurance Is Part of the Cost
FHA loans include an upfront mortgage insurance premium and an annual premium collected through monthly payments. Compare these costs alongside the interest rate.
Prepare for Approval
FHA Loan Requirements and Documents
You do not have to figure out every guideline before asking for help. Start with your financial picture and the records you have; we can identify what else is needed.
What Lenders Review
- Credit history
- FHA guidelines generally allow 3.5% down with a qualifying credit score of at least 580. Lenders may apply additional requirements, and a score alone does not establish approval.
- Income and employment
- The lender reviews your income history, stability, and expected continuation. You generally need to document a two year history, but that does not mean two years with the same employer.
- Monthly debts
- Your proposed housing payment and other monthly obligations are compared with qualifying income. The acceptable debt ratio depends on the application, underwriting findings, and lender requirements.
- Funds for Your Purchase
- Provide account statements and any supporting records showing where your down payment and closing funds will come from. Additional savings may be required depending on your application.
Your Document Starting List
- Income records
- Recent pay statements and W2s, or documentation for retirement, self employment, or other income used to qualify.
- Account statements
- Recent statements showing funds for the purchase, with records supporting eligible gifts and significant deposits when requested.
- Employment and Residence History
- Provide at least two years of employment and residence history, including employer details and previous addresses. Include information about existing mortgages and other financial obligations.
- Photo ID and Purchase Contract
- Have a copy of your government issued photo ID ready. Once you have a home under contract, provide the signed purchase agreement. You can begin the preapproval process before choosing a home.
Your income sources and underwriting review determine the final documentation needed.
Plan Beyond the Down Payment
How Much Cash Will You Need?
The minimum down payment and the total cash needed to close are different amounts. A useful purchase plan accounts for both, plus the savings you want available after moving.
Your Down Payment
Eligible buyers may put as little as 3.5% down. The amount depends on credit qualifications and other requirements. Funds may come from documented savings or an eligible gift.
Closing Costs and Prepaids
Budget for lender and settlement charges, prepaid interest, and taxes and insurance collected at closing. Seller credits may help with eligible expenses if agreed to in the contract and allowed by the program.
Savings After Closing
Keep room for moving, repairs, and everyday surprises. Required reserves vary, but spending every available dollar on the purchase can leave your budget uncomfortable.
Understand the Ongoing Cost
FHA Mortgage Insurance Explained
FHA mortgage insurance protects the lender if a borrower defaults. You pay for that coverage through an upfront premium and an annual premium collected through monthly payments.
Upfront and Monthly Costs
The upfront premium can generally be financed into the loan instead of paid in cash at closing. Financing it increases the loan balance and the amount on which interest is charged.
The annual premium adds to your monthly cost. Include principal, interest, mortgage insurance, property taxes, homeowners insurance, and any association dues when comparing your housing budget.
How Long Does It Last?
- Less than 10% down
- For new FHA loans, annual mortgage insurance generally continues for the loan term when the original loan to value is above 90%.
- 10% down or more
- When the original loan to value is 90% or less, annual mortgage insurance generally lasts 11 years.
Reaching 20% equity does not trigger conventional PMI cancellation rules. Refinancing later requires a new qualification review and a comparison of costs; it is not guaranteed.
Compare Before You Commit
FHA or Conventional: Which Fits Your Purchase?
FHA can be a strong option for some borrowers, but a smaller down payment or lower rate does not tell the whole story. Compare the payment, cash needed, and costs over the time you expect to keep the loan.
Down payment
FHA
As little as 3.5% for eligible buyers.
Conventional
Some eligible purchases allow as little as 3%; requirements vary by program.
Credit considerations
FHA
Can offer flexibility for some credit histories, subject to approval.
Conventional
Eligibility and pricing depend on the credit profile, program, and underwriting review.
Mortgage insurance
FHA
Upfront and annual premiums. Duration generally depends on the original loan to value.
Conventional
PMI is generally needed below 20% down. Cancellation options depend on the loan and insurance arrangement.
Property use
FHA
Primary residences, including eligible properties with one to four units.
Conventional
Primary residences, second homes, and investment properties, with different requirements.
What to compare
FHA
The complete payment, cash needed, fees, and mortgage insurance over the time you expect to keep the loan.
Conventional
Use the same purchase price and other assumptions so the comparison is meaningful.
Make Sure the Home Fits Too
FHA Property Requirements and Loan Limits
Your approval and the property’s eligibility are separate parts of the purchase. Identify the home type, location, and condition early so you can plan with fewer surprises.
An Eligible Primary Residence
Eligible properties may include single family homes, certain condos, and homes with two to four units when you occupy one unit. Condo approval and additional property requirements may apply. FHA purchase loans are not for vacation homes or properties held solely as investments.
Condition and Appraisal
An FHA appraisal considers value and applicable property standards. Some condition issues may require repairs before closing. It does not replace an independent home inspection.
Limits for Your County
FHA sets a maximum loan amount for each county, with limits updated annually. We can confirm the limit for the home you are considering and help you compare other financing options if you need to borrow more.
Common Questions
FHA Loan Questions
Answers to help you move forward with a clearer plan.
Is FHA financing only for first time homebuyers?
No. Eligible repeat buyers can use FHA financing for a primary residence. Previous homeownership does not automatically disqualify you, although occupancy and any existing FHA loan must be reviewed.
Can I get an FHA loan with a credit score below 580?
FHA guidelines generally permit scores from 500 to 579 with at least 10% down, but lender requirements can be more restrictive. These agency minimums do not mean every lender offers the loan or that an application will be approved. Ask us to review current availability for your situation.
Can gift funds or seller credits help with cash needed?
An eligible gift from an acceptable donor may help with the down payment or closing costs when properly documented. Agreed seller credits may cover eligible closing expenses within program limits, but cannot replace your required down payment.
Does FHA mortgage insurance end when I reach 20% equity?
No. For a new FHA loan, how long you pay mortgage insurance depends on your original down payment.
If you put down less than 10%, you generally pay mortgage insurance for as long as you keep that FHA loan. If you put down 10% or more, it generally ends after 11 years.
Paying down your mortgage or having your home increase in value does not shorten that schedule.
Can I qualify for FHA financing if I am self employed?
Yes, if your documented qualifying income and overall application meet the requirements. The lender generally reviews tax returns and other business records as applicable. Being self employed does not automatically require a bank statement or other specialty loan.
See documentation for self employed borrowers →Is an FHA appraisal the same as a home inspection?
No. The FHA appraisal helps establish value and assess whether the property meets applicable requirements. A home inspection provides a separate assessment of the home’s condition and systems; the appraisal is not a substitute.
How do I know whether FHA or conventional is better for me?
Compare actual financing options using the same purchase assumptions. Review the complete monthly payment, cash needed at closing, lender fees, mortgage insurance, and how long you expect to keep the loan. The lowest advertised rate or smallest down payment does not automatically produce the best overall fit.
Explore conventional loan options →Keep Exploring
Helpful Resources for Your Next Step
First Time Homebuyers
Get a clearer picture of the home buying process and the decisions ahead.
Home Affordability Calculator
Explore a starting price range using your income and monthly debts. Actual FHA qualification requires a separate review.
Already Have an FHA Loan?
Explore whether an FHA streamline refinance could fit your existing mortgage.
A Clearer Plan.
A More Confident Home Purchase.
You bring the home buying goals. We help you understand the financing, compare your options, and take the next step.