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FHA loans are backed by the Federal Housing Administration (FHA), an agency under the jurisdiction of the Department of Housing and Urban Development (HUD). FHA loans are insured by the FHA, which simply means that the owners of your mortgage are protected against loss if you default on your loan.
FHA loans allow home buyers to borrow up to a certain percentage of a home’s value, depending on their credit score. Home buyers who have a credit score over 580 can borrow up to 96.5% of a home’s value with an FHA loan. Home buyers whose credit scores are between 500 – 579 can still qualify for an FHA loan with a 10% down payment.
To qualify for an FHA loan, borrowers need a minimum credit score of 580 to be eligible for a 3.5% down payment. Those with scores between 500 and 579 must provide a 10% down payment. FHA loans are intended for primary residences only, meaning the home must be your main place of living—not for investment or flipping.The debt-to-income (DTI) ratio must be below 56.99%, including all housing and other monthly debts. Properties must meet HUD’s safety and livability standards to qualify.Loan limits for 2025 vary by county. The standard limit for most single-family homes is $524,225, but in high-cost areas like Monroe County, Florida, it can go up to $1,859,950.All FHA loans require mortgage insurance. This includes an upfront mortgage insurance premium (MIP) of 1.75% of the loan amount, along with monthly MIP payments throughout the life of the loan.
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