FHA Loan Requirements 2026: Complete Checklist for 3.5% Down Payment Approval
FHA loans are the easiest way for first-time buyers to get approved! With just 3.5% down payment, 580 credit score, and 43% debt-to-income ratio, you can buy a home even with limited savings and imperfect credit. Combine FHA with down payment assistance to buy with $0 out of pocket, or use tax credits to save $15K+ annually. This complete 2026 guide covers every requirement, document needed, approval timeline, and insider tips to get approved fast.
✅ FHA Quick Requirements (2026)
- ✓Credit Score: 580 minimum for 3.5% down (500-579 requires 10% down)
- ✓Down Payment: 3.5% minimum ($14,000 on $400K home)
- ✓Debt-to-Income: 43% maximum (50% with compensating factors)
- ✓Employment: 2 years steady income (same job or field)
- ✓Loan Limits: $498,257-$1,149,825 (varies by county)
- ✓Property: Must meet FHA appraisal standards
- ✓Approval Time: 7-14 days for pre-approval, 30-45 days to close
FHA Credit Score Requirements (2026)
Credit Score Tiers & Down Payment
| Credit Score | Min Down Payment | Max LTV | Approval Odds |
|---|---|---|---|
| 580-619 | 3.5% | 96.5% | Good (70-80%) |
| 620-659 | 3.5% | 96.5% | Very Good (80-90%) |
| 660-699 | 3.5% | 96.5% | Excellent (90-95%) |
| 700+ | 3.5% | 96.5% | Near Certain (95%+) |
| 500-579 | 10% | 90% | Difficult (40-60%) |
| <500 | Not Eligible | N/A | Denied |
✅ 580+ Credit Score (3.5% Down)
Most Common: 85% of FHA borrowers have 580+ credit
- • Down payment: $14,000 on $400K home
- • Easier approval with compensating factors
- • Can use gift funds for entire down payment
- • Seller can pay up to 6% closing costs
⚠️ 500-579 Credit Score (10% Down)
Harder to Qualify: Need $40K down on $400K home
- • Down payment: $40,000 on $400K home (10%)
- • Fewer lenders offer this (manual underwriting)
- • Need strong compensating factors (high income, low DTI)
- • Consider improving credit to 580+ first
💡 Credit Score Impact on Rate
Higher credit score = lower interest rate = thousands saved!
| Credit Score | Rate (Jan 2026) | Monthly Payment | 30-Yr Interest |
|---|---|---|---|
| 580-619 | 6.75% | $2,593 | $533,480 |
| 620-659 | 6.50% | $2,528 | $510,080 |
| 660-699 | 6.25% | $2,462 | $486,320 |
| 700+ | 6.00% | $2,398 | $463,280 |
*Based on $400K loan. 700+ score saves $70,200 vs 580-619 score!
🎯 Ready to Get FHA Pre-Approved?
Compare FHA lenders and get pre-approved in 7-14 days with just 580+ credit!
Get FHA Pre-Approval Now →Free quotes • No credit impact • 3.5% down only
FHA Down Payment & DTI Requirements
Down Payment Calculator by Home Price
| Home Price | 3.5% Down | Loan Amount | Monthly (6.5%) |
|---|---|---|---|
| $200,000 | $7,000 | $193,000 | $1,220 |
| $300,000 | $10,500 | $289,500 | $1,830 |
| $400,000 | $14,000 | $386,000 | $2,440 |
| $500,000 | $17,500 | $482,500 | $3,050 |
💰 Down Payment Sources (All Allowed!)
- • Your Savings: Bank accounts, investment accounts
- • Gift Funds: 100% can be gifted by family (parents, siblings, grandparents)
- • Down Payment Assistance: State/local grants and forgivable loans
- • 401(k) Loan: Borrow from retirement (not recommended)
- • Employer Assistance: Some companies offer home buying help
🎁 Gift Funds Rules (Most Popular!)
100% of down payment can be gifted - you can pay $0 out of pocket!
- • Who Can Gift: Family members (parents, siblings, grandparents, aunts/uncles)
- • Gift Letter Required: States money is a gift, not a loan
- • Paper Trail: Must show transfer from donor's account to yours
- • Seasoning: Funds must be in your account 60 days before closing (or provide full paper trail)
- • No Repayment: Cannot be a loan in disguise
Debt-to-Income (DTI) Limits
What is DTI?
Debt-to-Income Ratio = (Total Monthly Debts ÷ Gross Monthly Income) × 100
Example Calculation:
Monthly Debts:
✅ Approved! 47% DTI is within FHA's 50% limit with compensating factors.
✅ DTI 43% or Less (Automatic Approval)
Best Odds: 90%+ approval rate with 43% DTI or less
- • No compensating factors needed
- • Fastest approval (7-10 days)
- • Lower interest rates
- • More lender options
⚠️ DTI 44-50% (Need Compensating Factors)
Still Possible: Need at least 1 compensating factor
- • High Credit Score: 680+ shows strong credit management
- • Large Down Payment: 10%+ reduces lender risk
- • Cash Reserves: 3-6 months payments saved
- • Low Housing Ratio: New mortgage <31% of income
- • Stable Income: 5+ years same job/field
FHA Loan Limits 2026 (By County)
FHA loan limits vary by county. High-cost areas have higher limits up to $1,149,825!
| Area Type | 2026 Limit | Examples |
|---|---|---|
| Low-Cost (Floor) | $498,257 | Most of Midwest, South, rural areas |
| Medium-Cost | $600,000-$800,000 | Phoenix, Las Vegas, Portland, Seattle suburbs |
| High-Cost (Ceiling) | $1,149,825 | San Francisco, LA, NYC, DC, Hawaii, Alaska |
📍 Top High-Cost Counties (2026)
California:
- • San Francisco: $1,149,825
- • Los Angeles: $1,149,825
- • San Diego: $1,149,825
- • Orange County: $1,149,825
- • Santa Clara: $1,149,825
Other States:
- • New York City: $1,149,825
- • Washington DC: $1,149,825
- • Honolulu, HI: $1,149,825
- • Seattle, WA: $1,089,300
- • Denver, CO: $715,000
💡 Check your county: Visit HUD.gov or ask your lender for exact limits
FHA Property Requirements (Appraisal Standards)
FHA Appraisal: What Must Pass
FHA requires properties to be safe, sound, and secure. Appraisers check for:
✅ Must Have (Required)
- • Safe Structure: No foundation cracks, roof leaks, or structural damage
- • Working Systems: Functional HVAC, plumbing, electrical
- • Safe Access: Clear pathways, working stairs/railings
- • No Hazards: No lead paint (pre-1978 homes), asbestos, mold
- • Adequate Utilities: Water, sewer/septic, electricity
- • Weatherproof: No broken windows, damaged siding
❌ Automatic Fail (Must Fix)
- • Roof Damage: Missing shingles, leaks, <2 years life left
- • Foundation Issues: Major cracks, settling, water damage
- • Peeling Paint: Pre-1978 homes (lead paint risk)
- • Broken Windows: Cracked or missing glass
- • Electrical Hazards: Exposed wiring, outdated panels
- • Plumbing Leaks: Active leaks, non-functional toilets/sinks
- • Pest Damage: Termites, wood rot
🏠 Eligible Property Types
- • Single-Family Homes: Most common (1-unit)
- • Condos: Must be FHA-approved (check HOA status)
- • Townhouses: Attached single-family
- • 2-4 Unit Properties: Live in one, rent others (higher limits)
- • Manufactured Homes: Built after June 1976 (HUD code)
- • New Construction: Must be completed and habitable
💰 Get Your FHA Pre-Approval Today!
Compare FHA lenders and see if you qualify with 580+ credit and 43% DTI!
Compare FHA Lenders Now →No credit impact • Free comparison • 7-14 day approval
Frequently Asked Questions (FAQs)
What is the minimum credit score for an FHA loan in 2026?
The minimum credit score for an FHA loan is 580 for 3.5% down payment. If your score is 500-579, you'll need 10% down. Scores below 500 are not eligible for FHA loans.
Can I use gift money for my FHA down payment?
Yes! 100% of your down payment can be gifted by family members (parents, siblings, grandparents, aunts/uncles). You'll need a gift letter stating the money is a gift, not a loan, and provide a paper trail showing the transfer.
What is the maximum debt-to-income ratio for FHA loans?
The standard maximum DTI is 43%, but you can go up to 50% with compensating factors like high credit score (680+), large down payment (10%+), or significant cash reserves (3-6 months).
How long does FHA approval take in 2026?
Pre-approval takes 7-14 days after submitting your application and documents. The full process from application to closing typically takes 30-45 days, including appraisal, underwriting, and final approval.
What are FHA loan limits for 2026?
FHA loan limits range from $498,257 (low-cost areas) to $1,149,825 (high-cost areas) like San Francisco, Los Angeles, NYC, and Washington DC. Limits vary by county based on median home prices.
Can I buy a fixer-upper with an FHA loan?
Standard FHA loans require homes to be safe, sound, and secure. For fixer-uppers, use an FHA 203(k) Rehab Loan which finances both the purchase price and renovation costs into one mortgage.
Do I need 2 years of employment for FHA?
Yes, FHA requires 2 years of steady employment in the same job or field. Recent graduates can qualify if their job relates to their degree. Short gaps (<6 months) are acceptable with explanation.
Can self-employed borrowers get FHA loans?
Yes! Self-employed borrowers need 2 years of tax returns (1040 + Schedule C or 1099s), a current profit & loss statement, and proof of business license. Income is calculated as net income plus depreciation and depletion.