The Federal Housing Administration quietly updated its rules this spring, and the change matters if you've been priced out of a conventional mortgage.
The agency raised its threshold for "manual underwriting" — the process used when an automated system can't approve you on the spot.
For years, borrowers with credit scores below 620 faced a mountain of extra paperwork.
Now that cutoff sits lower, meaning more applicants get a faster path to a yes.
So what does it actually take to get an FHA loan today?
The headline numbers have stayed steady: a minimum credit score of 580 gets you in with a 3.5% down payment.
Scores between 500 and 579 can still qualify, but you'll need 10% down.
And unlike conventional loans, the down payment can come entirely from a gift, a grant, or a down payment assistance program — no requirement that any of it be your own savings.
FHA loans require mortgage insurance premiums — an upfront fee of 1.75% of the loan amount, plus an annual premium that runs roughly 0.55% of your balance.
That annual premium typically stays for the life of the loan unless you refinance into a conventional mortgage later.
On a $300,000 loan, that's about $1,650 a year tacked onto your payment, even after you've built substantial equity.
Debt-to-income ratios are where a lot of buyers stumble.
The FHA generally likes to see your total monthly debts — car payment, student loans, minimum credit card payments, and the new mortgage — stay under 43% of your gross income.
Go above that and you'll need compensating factors: cash reserves, a long history of paying rent on time, or a steady job with room to grow.
Property rules trip up plenty of deals too.
The home has to pass an FHA appraisal that checks for safety and soundness — peeling paint, a failing roof, or a broken furnace can stall or kill a sale.
That's why sellers sometimes prefer cash or conventional offers.
If you're competing in a hot market, expect to lose a few bids before you win one.
Here's the part most guides skip: the FHA loan limits for 2025 top out at $524,225 in low-cost areas and climb past $1.2 million in expensive metros like San Francisco and New York.
If the home you want costs more than the local ceiling, you'll need to cover the difference in cash or switch loan programs.
One more thing worth checking — your student loan payments.
The FHA counts 1% of your outstanding balance as a monthly obligation if you're on an income-driven plan, even if your actual payment is $0.
That single rule has disqualified more buyers than almost anything else. **The bottom line:** An FHA loan isn't a handout or a trap — it's a tool with a specific price tag.
If your credit is thin, your savings are modest, and you plan to stay put for a while, the math can work in your favor.
Final Thoughts
Just run the full monthly payment, insurance included, before you fall in love with a listing.