Every FHA loan must meet minimum requirements set by HUD for credit score, down payment, debt-to-income ratio, income verification, employment history, and property condition. This guide covers each requirement in plain English.
To qualify for an FHA loan, you generally need a 580 credit score for 3.5% down, a debt-to-income ratio below 43% (higher with compensating factors), verifiable income from a 2-year employment history, and a property that passes FHA minimum property standards. Individual lenders may set requirements above these HUD minimums.
Credit score is the first factor most lenders evaluate. FHA loans have the most flexible credit requirements among major loan programs.
Eligible for the minimum 3.5% down payment. Most FHA lenders work in this range. Automated underwriting approval is common when other factors are solid.
May qualify with 10% down payment. Manual underwriting typically required. Fewer lenders accept this range. Approval depends on compensating factors.
While HUD sets the minimum at 580/500, most FHA lenders set their own minimum between 600–640. This is called a lender overlay. About 40% of FHA-approved lenders accept scores below 620. Shopping with multiple lenders is the best way to find one that matches your credit profile.
Your debt-to-income ratio compares your monthly debt payments to your gross monthly income. FHA uses two DTI ratios.
31%
Your projected monthly mortgage payment (PITI + MIP) divided by gross monthly income. FHA guideline is 31%, but may go higher with compensating factors.
43%
All monthly debt payments (mortgage + credit cards + car loans + student loans + other debts) divided by gross monthly income. FHA allows up to 50%+ with strong compensating factors.
Monthly gross income: $6,000
Proposed mortgage (PITI + MIP): $1,800 → Front-end DTI: 30% ✓
Existing debts (car + student loans + credit cards): $600
Total monthly debt: $2,400 → Back-end DTI: 40% ✓
| Credit Score | Minimum Down Payment | Example ($350,000 Home) |
|---|---|---|
| 580+ | 3.5% | $12,250 |
| 500–579 | 10% | $35,000 |
FHA lenders must verify your income is stable, predictable, and likely to continue. You'll need to document your income through several sources.
Self-employed borrowers typically need 2 years of tax returns (personal and business), a year-to-date P&L statement, and 2 months of business bank statements. Income is calculated using an average of the last 2 years' net income from tax returns.
FHA guidelines prefer a 2-year employment history. However, the FHA is more flexible than conventional lenders when it comes to employment gaps and job changes.
Switching jobs within the same field is generally acceptable. The key is that income remains stable or increases. You typically need 30 days of pay stubs from a new job before closing.
Gaps may be acceptable with a reasonable explanation — illness, education, caring for family, or time between jobs. You'll typically need to be back at work for at least 6 months before applying.
Recent graduates may qualify using their new job offer letter and transcripts in place of 2-year employment history. The degree field should relate to the new position.
Income from multiple part-time jobs can be used if you've maintained the pattern for 2 years. Seasonal income requires a 2-year history to be counted.
The property you buy with an FHA loan must meet Minimum Property Standards (MPS) set by HUD. An FHA-approved appraiser evaluates the property for safety, security, and structural soundness.
FHA property standards protect you as the buyer. If the property doesn't meet standards, the seller must fix the issues before closing — or you may need to choose a different property. An FHA 203(k) loan can finance both purchase and repairs if you want to buy a fixer-upper.
Use this checklist to see where you stand before applying for an FHA loan.
If you're weak in one area, strong performance in another can help. These are called compensating factors. FHA underwriters use them to approve loans that don't perfectly fit every guideline.
If your DTI is above 43%, compensating factors that may help include:
Get a quick FHA eligibility review. No obligation. Takes about 10 minutes.
Subject to credit approval, income verification, and property approval. Not a commitment to lend.
Disclaimer: This page provides educational information about FHA loan requirements. FHA loans are insured by the Federal Housing Administration (HUD). MortgageClarity.net is operated by Valley West Mortgage (NMLS #65506) and is not affiliated with HUD, FHA, or any government agency. Requirements are subject to change. Individual lender requirements may differ from HUD minimums. Loan approval subject to credit, income, asset, property, and investor guidelines. Not all borrowers will qualify. Not a commitment to lend. Equal Housing Lender.