Learn About FHA Loans and How You Can Qualify
Who can qualify for an FHA loan?
Last modified: August 31, 2023
FHA home loans are for any financially qualified borrower. You don’t have to earn a minimum amount of money, and there is no maximum income limit for FHA mortgages. There may be a perception that FHA loans are designed for people who can't afford conventional mortgages or those with an economic disadvantage, but that is not necessarily the case. A main benefit is the low down payment option for borrowers with good credit, many of whom find this feature extremely desirable.
Your credit history and FICO scores will be important factors when you apply for the loan. Minimum FICO score requirements for FHA loans may not be as high as a lender’s credit score standards, so you will need to ask your loan officer what is required above and beyond what FHA is looking for in a borrower.
HUD says that borrowers with FICO scores of at least 580 will be technically eligible for maximum financing, and require them to come up with a low 3.5% down payment. Borrowers with FICO scores between 500 and 579 would be required to put down 10% for their FHA mortgage. Those with FICO scores below 500 are not eligible for an FHA financing.
In addition, borrowers will need a 12-month record of on-time payments for all financial responsibilities. This includes things like rent, car payments, student loans, credit cards, and utilities, among others. A good debt-to-income ratio demonstrates that a borrower makes enough to pay their bills and is another important factor towards getting loan approval.