- 580+ credit score unlocks the 3.5% down payment tier. 500-579 requires 10% down.
- Maximum DTI is 43% by the book, though automated underwriting can approve up to ~57% with strong compensating factors.
- FHA charges mortgage insurance no matter your down payment — 1.75% upfront plus roughly 0.55% annually.
- Unlike conventional PMI, FHA's annual MIP often lasts for the life of the loan, not just until you hit 20% equity.
The credit score → down payment tradeoff
FHA ties your minimum down payment directly to your credit score — there's no separate approval tier, just two clean thresholds:
What income and debt levels actually qualify
That top figure isn't a typo — FHA's automated underwriting system can approve back-end DTI well above the standard 43% ceiling when strong compensating factors are present: significant cash reserves, a long history of on-time rent payments, or minimal payment increase versus your current housing cost. This is one of FHA's biggest practical advantages over conventional financing for borrowers carrying real debt.
The real cost: mortgage insurance premium (MIP)
This is the part FHA's low down payment doesn't advertise as loudly: every FHA loan carries mortgage insurance, regardless of down payment size — unlike conventional loans, where 20% down avoids PMI entirely. (Source: HUD's 203(b) mortgage insurance program page.)
A real worked example
On a $350,000 home with 3.5% down (a $12,250 down payment, 580+ credit score), here's the actual math:
At a 6.5% rate: $2,172/mo principal & interest, plus $158/mo in ongoing MIP — property tax and homeowners insurance would add further to the total, same as any other loan type.
Loan limits and property requirements
(Figures sourced from HUD's official 2026 FHA loan limits announcement and the HUD FHA program page.)
$541,287
The standard maximum in most counties nationwide.
$1,249,125
The maximum in high-cost counties like parts of California, Hawaii, and the Northeast.
Must pass FHA appraisal
Home must meet HUD safety, durability, and livability standards — not just a value appraisal.
Primary residence only
FHA loans can't be used for investment properties or second homes.
The realistic path to approval
- Check your credit report before applying. A 2-point swing at the 580 line changes your entire down payment requirement — dispute errors and pay down small balances first if you're close.
- FHA is where high-DTI files close. In 2025, 89% of FHA purchase decisions at 50–60% DTI were approved, against 35% for conventional. See which lenders, by state.
- Expect lender overlays above FHA's published minimums. Many lenders set their own internal floor around 620-640, even though FHA's official minimum is lower. Shop multiple lenders if you're near the line.
- Gift funds are allowed for the full down payment with proper documentation — a real advantage over conventional loans' stricter gift-fund limits.
- Plan your MIP exit strategy from day one. If you put down less than 10%, refinancing into a conventional loan once you reach 20% equity is usually the only way to drop mortgage insurance.
How we verify this: figures on this page are computed from standard published formulas and checked against our own calculators. Assumptions are stated inline. Found an error? Let us know — see our editorial approach.