How much FHA loan you qualify for depends on your income, debts, credit score, and location, but generally involves a 3.5% down payment (with 580+ credit) or 10% (with 500-579 credit), within federal loan limits set by county, which vary from around $541,287 (low-cost) to over $1.2 million (high-cost) for a single-family home in 2026. Use an FHA loan calculator and check HUD's loan limits for your specific county to get an estimate, as lenders assess your debt-to-income (DTI) ratio against these limits.
FHA loan limits vary by county and are updated annually to reflect changes in property values. As of 2025, the common limit is $524,225 for a single-family home. The limit can go as high as $1,209,750 for a single-family home in high-cost areas and up to $2,326,875 for a four-plex.
The main cons of FHA loans are mandatory Mortgage Insurance Premiums (MIP) – both upfront and annual, which can last for the life of the loan or 11 years depending on down payment. Other downsides include strict property standards, lower loan limits in high-cost areas, higher long-term costs (especially with good credit), and limitations to primary residences only, which can make them less appealing to sellers and buyers with excellent credit seeking better conventional loan terms.
To afford a $300,000 house, you typically need an annual income between $75,000 to $95,000 (your annual salary), depending on your financial situation, down payment, credit score, and current market conditions.
FHA loan disqualifications often stem from poor credit (below 500), high debt-to-income (DTI) ratios (often above 43%), unstable employment, insufficient funds for down payment/closing costs, or issues with the property itself, like hazards or severe disrepair, plus owing back federal debts or having delinquent student loans. Clearing federal debt, establishing stable income, and ensuring the home meets safety standards are key to overcoming these hurdles, notes FHA.com and The Home Loan Expert.
FHA loans are designed to help make homeownership more affordable for Americans with moderate incomes or lower credit scores. But like any mortgage, FHA loans require the borrower (or seller) to pay closing costs, even though they're backed by the U.S. Federal Housing Administration (FHA).
To afford a $400k mortgage, you generally need an annual income between $90,000 and $135,000, but this varies significantly; with a larger down payment and less debt, you might qualify with around $100k, while higher interest rates or no down payment could push the need closer to $130k-$160k, with lenders focusing on keeping total monthly debts (housing + other loans) under 36-43% of your gross income.
The most you can borrow is usually capped at four-and-a-half times your annual income, but this isn't guaranteed. Use our Mortgage repayment calculator to get an idea of how much you could borrow based on your salary.
The FHA 85% rule refers to a past guideline for cash-out refinances limiting the loan to 85% Loan-to-Value (LTV) and a specific rule for identity-of-interest transactions (like buying from family) where borrowers couldn't finance more than 85% of the home's value unless exceptions applied, such as renting from the family member for at least six months prior. While the general cash-out LTV is now 80%, the 85% rule still applies to certain related-party sales, requiring a 15% down payment unless an exception is met, notes FHA.com.
In general, the FHA loan approval process from preapproval to closing typically takes between 30 and 60 days. During this time, you'll get preapproved, go house hunting, and make an offer. Once your offer has been accepted, your lender will conduct the underwriting process.
The main cons of FHA loans are mandatory Mortgage Insurance Premiums (MIP) – both upfront and annual, which can last for the life of the loan or 11 years depending on down payment. Other downsides include strict property standards, lower loan limits in high-cost areas, higher long-term costs (especially with good credit), and limitations to primary residences only, which can make them less appealing to sellers and buyers with excellent credit seeking better conventional loan terms.
For a $400,000 home, expect closing costs to generally fall between $8,000 to $24,000 (2% to 6% of the home price), though it can vary by location and lender, with some estimates placing typical costs around $8,000 to $12,000 (2% to 3%) for fees, plus prepaid items like taxes and insurance, leading to a total cash needed closer to $12,000-$15,000. Key costs include loan origination, appraisal, title, property taxes, and insurance, with higher percentages often seen on lower-priced homes due to fixed-cost fees.
Cracks in the foundation, signs of water damage, or evidence of settling can raise red flags. These issues often require a structural engineer's inspection, which can add time and cost.
Many customers ask us if FHA loans have mortgage insurance which they often call "PMI," which stands for private mortgage insurance. You are required to pay mortgage insurance on FHA loans, but the mortgage insurance on these loans is called a mortgage insurance premium (MIP), not PMI.
Health and safety concerns: Properties with potential health and safety hazards, such as lead-based paint, asbestos, or mold, may not qualify for an FHA loan. The FHA prioritizes the well-being of borrowers and aims to ensure that the homes they finance are safe and healthy environments for residents.
The best time to buy a house is a balance between market conditions and personal readiness, with late summer/early fall often ideal for lower prices and less competition, while winter offers the lowest prices but limited homes, and spring/early summer has the most inventory but highest prices and competition. Ultimately, the best time is when you're financially prepared with a good credit score, down payment, stable income, and emergency fund, as personal readiness trumps seasonal trends.