FHA Loans 2026: The Ultimate Guide

An FHA loan is a government-backed mortgage insured by the Federal Housing Administration, designed for borrowers with lower credit scores and smaller down payments. FHA loans require just 3.5% down with a 580+ credit score, making homeownership accessible to first-time buyers and those with imperfect credit.

To qualify for an FHA loan in 2026, you need a minimum credit score of 580, a down payment of 3.5%, and a debt-to-income ratio below 43%. Borrowers with scores from 500-579 can qualify with 10% down. You must also have steady employment history and the property must meet FHA standards.

The FHA loan limit for 2026 is $472,030 in most areas (floor) and up to $1,149,825 in high-cost markets (ceiling). These limits are set annually by HUD and vary by county based on median home prices. Alaska, Hawaii, Guam, and the U.S. Virgin Islands have a higher ceiling of $1,149,825.

Current FHA mortgage rates range from 5.75% to 7.25% as of February 2026, depending on credit score, down payment, and lender. FHA rates are typically 0.15-0.25% lower than conventional rates for borrowers with credit scores below 680.

FHA loans require two types of mortgage insurance: an upfront MIP (UFMIP) of 1.75% of the loan amount, and an annual MIP of 0.55% for most borrowers. Unlike conventional PMI, FHA MIP lasts for the life of the loan (for loans with less than 10% down). This is the biggest drawback of FHA loans.

FHA loans are better for borrowers with credit scores below 680 or less than 5% down payment. Conventional loans are better for borrowers with 700+ credit and 5-20% down, since PMI can be cancelled. The lifetime cost difference can be $30,000-$50,000.

To apply for an FHA loan, get pre-approved with an FHA-approved lender, gather your documentation (pay stubs, W-2s, bank statements, tax returns), and submit your application. The process typically takes 30-45 days from application to closing.