Floor
3.5% down at 580 credit
FHA's headline number. With a 580+ score, 3.5% down qualifies. Below 580 → 10% down required (and harder to find lenders willing to do manual underwriting at that range).
FHA Loans · the forgiving loan
Lower bar to enter.
Higher bar to leave.
FHA's 3.5% down + 580 score floor opens doors that conventional shuts. The trade-off: mortgage insurance for the life of the loan unless you put down 10%+. Right tool for the right file.
· FHA basics
Five facts.
All matter.
Limits
County-specific loan limits
FHA loan limits vary by county. Most areas: ~$498K (2024). High-cost areas: up to ~$1.15M. Check your county before assuming FHA fits.
MIP
Mortgage insurance for life
Upfront MIP: 1.75% of loan, financed in. Annual MIP: 0.55% of loan, paid monthly. CONTINUES for the life of the loan unless you put down 10%+ (then drops at year 11). Hard exit.
DTI
More forgiving DTI
FHA tolerates DTI up to 50% with compensating factors (vs 43% conventional). Strong play for higher-debt borrowers.
Property
Property condition rules
FHA requires property to meet minimum standards (no peeling lead paint, working systems, structural soundness). Some fixers don't qualify until repaired. Inspection report helps you pre-vet.
· Watch-outs
Four FHA
downsides to weigh.
Pitfall 01
Lifetime MIP locks you in.
After your equity hits 80% LTV, you can refinance into conventional to drop the MI. Plan that exit. Don't pay MIP forever just because you're inertia-locked.
Pitfall 02
Sellers sometimes prefer non-FHA buyers.
FHA appraisals are stricter. Some sellers worry about your offer. Pair with a strong realtor who knows how to position FHA offers.
Pitfall 03
Property condition can disqualify.
Peeling paint, broken windows, missing handrails. FHA requires fixes BEFORE close. Negotiate this with the seller — or find a different house.
Pitfall 04
Higher monthly than conventional at strong credit.
If your score is 720+ and you have 5%+ down, conventional may beat FHA in monthly cost (no lifetime MI). Run both before choosing.
FHA opens the door.
Then we plan the exit.
Five minutes. We compare FHA vs Conventional vs VA on YOUR file and tell you which actually wins.