FHA loans have long been the go-to mortgage for buyers who can't scrape together a fat down payment.
Backed by the Federal Housing Administration, they let you put down as little as 3.5% — and sometimes even 10% down with a credit score that would get you laughed out of a conventional lender's office.
Here's the catch: the rules are strict, and they've shifted in 2025.
If you're house hunting this spring, knowing exactly where the goalposts sit could save you thousands in rejected offers and wasted application fees.
The credit score floor is 580 for the 3.5% down option.
Fall between 500 and 579, and you can still qualify, but you'll need 10% down.
Below 500, most lenders won't touch an FHA loan at all.
That said, many banks layer on their own "overlays" — extra rules stricter than the federal minimum — so a 580 score doesn't guarantee approval everywhere.
Debt-to-income matters more than most buyers realize.
Lenders generally want your total monthly debts, including the new mortgage, under 43% of your gross income.
Push past that and you'll need compensating factors like cash reserves or a long job history.
A 2025 update also tightened how student loan payments get counted, which has tripped up some borrowers who thought they were safely under the line.
FHA loans require an upfront premium of 1.75% of the loan amount, rolled into your balance, plus an annual premium that runs roughly 0.55% of the loan.
On a $300,000 loan, that's about $165 a month on top of principal and interest.
Unlike conventional loans, that annual charge often lasts the life of the loan unless you refinance into a conventional mortgage later.
The home has to pass an FHA appraisal covering safety and soundness — peeling paint, a broken railing, or a missing handrail can kill a deal.
Sellers sometimes balk at FHA offers for this reason, even though the repairs are usually minor.
Get pre-approved before you shop, not after.
Pull your credit reports for free at AnnualCreditReport.com and dispute errors early, since a single collection account can drop you below the 580 line.
Save beyond the down payment — you'll need roughly 2% to 3% of the purchase price for closing costs, though sellers can cover some of that.
FHA rates and fees vary more than most buyers expect, and the difference between the best and worst quote can easily run into five figures over 30 years.
Ask each one directly whether they impose credit overlays.
Ask about down payment assistance programs in your state.
Many pair with FHA loans and can cover the entire 3.5%.
My take: FHA loans remain a solid on-ramp for buyers with imperfect credit or thin savings, but the mortgage insurance makes them pricey long-term.
If your credit improves within a few years, run the numbers on refinancing into a conventional loan — the monthly savings can be substantial.
Final Thoughts
Just don't let anyone rush you into signing before you've compared real quotes.