FHA Home
Loans
Backed by the Federal Housing Administration, FHA loans make homeownership accessible with low down payments and flexible credit requirements.
Last updated: March 2026
What Is an
FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (HUD). FHA loans were created in 1934 to stimulate homeownership during the Great Depression, and they continue to serve as a critical pathway to homeownership for millions of Americans, particularly first-time buyers and those with less-than-perfect credit.
Low Down Payment
With a credit score of 580 or higher, you can qualify for an FHA loan with just 3.5% down. On a $350,000 home, that is only $12,250 — compared to $70,000 at 20% down with a conventional loan.
- 3.5% down with 580+ credit score
- 10% down with 500-579 credit score
- Down payment gifts allowed from family
- Down payment assistance programs eligible
Flexible Credit Standards
FHA loans are designed for borrowers who may not qualify for conventional financing. The program accepts lower credit scores and is more forgiving of past credit events.
- Minimum 580 score for 3.5% down
- Scores 500-579 accepted with 10% down
- Bankruptcy OK after 2 years
- Foreclosure OK after 3 years
Government Backing
Because the FHA insures the loan, lenders face less risk and can offer more favorable terms. This government guarantee is what enables the lower credit and down payment requirements.
- Insured by the Federal Housing Admin.
- Lenders protected against default
- Competitive interest rates
- Available from FHA-approved lenders
Understanding
MIP Costs
All FHA loans require mortgage insurance premiums (MIP), which consist of an upfront premium paid at closing and an annual premium paid monthly. This insurance is what funds the FHA program and enables its flexible guidelines.
Upfront MIP (UFMIP)
1.75% of the loan amount, paid at closing. On a $350,000 loan, that is $6,125. This can be financed into the loan amount so you do not need extra cash at closing.
Annual MIP
Typically 0.55% of the loan amount per year, paid monthly. On a $350,000 loan, that adds roughly $160 per month to your payment. Rates vary based on loan term, amount, and LTV.
MIP Duration
For loans with less than 10% down, MIP lasts the life of the loan. With 10% or more down, MIP drops off after 11 years. Many borrowers refinance to a conventional loan once they reach 20% equity to eliminate MIP.
Refinance Strategy
Once you have built 20% equity and improved your credit score, refinancing from FHA to conventional eliminates MIP entirely. Theós Financial can monitor your equity and alert you when it makes sense.
FHA Loan Limits &
Property Standards
FHA sets loan limits by county based on local home prices. The property must also meet minimum safety and livability standards set by HUD.
FHA Loan Limits (2025)
The standard FHA loan limit for a single-family home in most areas is $498,257. In high-cost areas, the ceiling reaches $1,149,825. Los Angeles County and many California counties use the high-cost limits, enabling FHA financing on more expensive homes.
Property Appraisal Standards
FHA appraisals are more stringent than conventional. The home must meet Minimum Property Requirements (MPRs) covering safety, security, and soundness. Issues like peeling paint, missing handrails, faulty electrical, or roof damage must be addressed before closing.
Eligible Property Types
FHA loans can finance single-family homes, 2-4 unit properties (if you live in one unit), FHA-approved condominiums, and manufactured homes on permanent foundations. The property must be your primary residence — FHA does not allow investment property or vacation home financing.
Occupancy Requirement
You must move into the property within 60 days of closing and use it as your primary residence for at least one year. This requirement ensures FHA loans serve their intended purpose of helping people buy homes to live in.
Who Benefits Most from
FHA Loans?
FHA loans are specifically designed to expand homeownership access. While anyone can apply, certain borrowers benefit the most from FHA's flexible guidelines and low down payment requirements.
If you have a limited credit history, are recovering from a financial setback, or simply do not have a large savings for a down payment, FHA may be your best path to homeownership. Theós Financial has helped hundreds of first-time buyers achieve their homeownership dreams through FHA financing.
Ready to Apply for an
FHA Loan?
Our team specializes in FHA financing and can guide you through every step. We will help you understand your options, calculate your costs, and get pre-approved quickly so you can start shopping with confidence.
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