Ask anyone in a Facebook first-time-buyer group how to get into a house with a thin down payment, and the answer lands fast: go FHA.
The Federal Housing Administration program has a reputation as the forgiving uncle of mortgages — lower credit scores, small down payments, seller-paid closing costs.
That reputation is partly earned and partly marketing.
Here's what actually qualifies you in 2025.
Most lenders want a minimum 500 credit score, though scores under 580 require 10 percent down.
At 580 and up, you can put down as little as 3.5 percent.
You need steady employment, verifiable income, and a debt-to-income ratio that usually tops out around 43 to 50 percent depending on compensating factors.
The property has to be your primary residence and pass an FHA appraisal.
FHA appraisals are pickier than conventional ones.
Peeling paint, a loose handrail, a missing carbon monoxide detector, exposed wiring — any of it can stall your closing and leave you begging a seller to fix things in a market where they can just say no and take the next offer.
Then there's the fee structure nobody puts in the Instagram ad.
Upfront mortgage insurance premium runs 1.75 percent of the loan amount, rolled into what you borrow.
On top of that, annual mortgage insurance premiums typically cost 0.55 percent of the loan balance per year, split into monthly payments.
If you put down less than 10 percent, that annual premium generally stays for the life of the loan unless you refinance into a conventional product.
On a $300,000 loan, that's real money every month for 30 years.
Lenders get a loan the government insures against default.
The FHA itself collects those premiums to fund its reserves.
That doesn't make the program a scam — it has legitimately helped millions of households buy homes — but it does mean the cheerleading usually comes from people who get paid when you sign.
Conventional loans now allow down payments as low as 3 percent for qualifying buyers, and private mortgage insurance can be dropped once you hit roughly 20 percent equity.
Some credit unions and state housing finance agencies offer down payment assistance stacked on top of either loan type.
Ask two or three lenders to run both scenarios side by side, including the total monthly payment, not just the rate.
Watch the loan officer who steers you to FHA before pulling your credit and running actual numbers.
And if your credit score is sitting in the low 600s, spending a few months paying down a card or disputing an error can move you into a better loan program entirely.
Our take: FHA loans are a legitimate tool, especially for buyers with bruised credit or little savings.
Final Thoughts
But the lifetime insurance premiums and strict appraisal rules mean they're often the more expensive path over the long haul — and the people pitching them hardest rarely mention that part.