FHA loans require a minimum 3.5 percent down payment for borrowers with a credit score of 580 or more. Borrowers with a credit score of 500 to 579 need to put 10 percent down. Conventional conforming mortgages only require 3 percent down, and VA and USDA loans require no down payment.
Different down payment requirements — Most conventional lenders require a down payment of at least 5%. You can get an FHA Loan with a down payment as low as 3.5%. Different mortgage insurance requirements — Conventional lenders require private mortgage insurance, paid monthly, if your down payment is less than 20%.
FHA Loan: Cons
Here are some FHA home loan disadvantages: An extra cost – an upfront mortgage insurance premium (MIP) of 2.25% of the loan's value. The MIP must either be paid in cash when you get the loan or rolled into the life of the loan. Home price qualifying maximums are set by FHA.
Some reasons a seller might refuse an FHA loan include misconceptions about longer closing times, stricter property requirements, or the belief that FHA borrowers are riskier.
Since your home must meet FHA property minimums, the appraisal process may include more requirements than a conventional home loan. The appraisal is required to be performed by an FHA approved appraiser and may have additional inspections which could result in a higher appraisal cost.
Can I get an FHA loan with no down payment? No. FHA loans require at least 3.5% down for borrowers with credit scores of 580 or higher, and a 10% down payment from borrowers with scores between 500-579. The USDA and VA loan programs offer 0% down payment mortgages, but you must meet the eligibility requirements.
The answer to this question is "no." There are no minimum income requirements for FHA loans.
How much is the down payment for a $300K house? You'll need a down payment of $9,000, or 3 percent, if you're buying a $300K house with a conventional loan. Meanwhile, an FHA loan requires a slightly higher down payment of $10,500, which is 3.5 percent of the purchase price.
The FHA approves loan amounts based on factors like your credit score, living expenses, assets, debt-to-income ratio, household income, and the value of the property. As of 2025, the FHA maximum loan limit for a one-unit property is $524,225 in low-cost areas and $1,209,750 in high-cost areas.
An individual earning $60,000 a year may buy a home worth ranging from $180,000 to over $300,000. That's because your wage isn't the only factor that affects your house purchase budget. Your credit score, existing debts, mortgage rates, and a variety of other considerations must all be taken into account.
Effective income is any income that the Federal Housing Administration (FHA) uses to qualify a borrower for a mortgage. It's often the gross income that is found on tax returns and may include salary, hourly wages, overtime pay, tips, commissions, and more.
So, yes, you can use a personal loan for closing costs. However, you can't use it for a down payment, and you must tell your lender that you'll go this route and borrow to pay the closing costs. The lender will include it in your debt-to-income (DTI) ratio, which is the amount of debt you have relative to your income.
In general, it's easier to qualify for an FHA loan than for a conventional loan, which is a mortgage that isn't insured or guaranteed by the federal government. Here are some key differences between FHA and conventional loans: Credit score and history: FHA loans allow for lower credit scores than conventional loans.
You may be denied for an FHA loan if you have declared bankruptcy but you have not had the bankruptcy discharged. You may be denied if you are delinquent on federal taxes or otherwise owe money to the federal government but without an approved payment plan.
Credit score requirements
Most first-time home buyer programs require a minimum credit score, often around 620, to qualify for conventional loans. However, some programs, like FHA loans, are more lenient, allowing scores as low as 580 or even lower with higher down payments.
The FHA Single-Family Home Loan program does not feature a no money down option. However, there are state and local programs that may offer assistance to home buyers, first-time home buyers, or home buyers who are in financial need.
The upfront fee is currently 1.75% of the initial loan amount and is rolled into the amount financed. The annual mortgage insurance premium can vary based on the loan amount and down payment. Please find the calculation examples on the FHA Details page here.
Can you put 20% down on an FHA loan? The FHA only requires a minimum down payment of 3.5% (or 10%, for lower credit borrowers). However, you can put down as much as you want above and beyond the down payment minimum, and doing so may get you a lower mortgage rate and lower monthly payments.
They feel that buyers who can secure any other financing option are 'stronger buyers. ' FHA buyers have a reputation for having low credit scores, little money to put down, and less than optimal qualifying requirements. Sellers want a 'sure thing' when they sell their home.
Roll the costs into your loan Yes, closing costs can be included in your loan amount if your lender offers a no-closing cost loan. → How to finance FHA closing costs on a purchase loan: Increase your interest rate and ask the lender to pay the fees, or increase your loan amount to pay them.
Getting the loan funds may take between four weeks and 90 days from start to finish, but the process can take longer if there are complicating factors. Here is what to know about how long it takes to get a home loan. Your FHA loan has multiple parts.