A 580 credit score and 3.5 percent down is the version of the FHA loan almost everyone means when they say "FHA loan." Score between 500 and 579 and the program still takes you, but the down payment jumps to 10 percent. Below 500, HUD will not insure the loan at all, and no lender can work around that.

Those tiers come straight from HUD's own guidance on minimum decision credit scores, and they are the first thing a loan officer checks. Everything below is the rest of the bar: what your debts can total, what the mortgage insurance costs you every month, and the ceiling on how much you can borrow in your county this year.

580
Score for 3.5% down
500 to 579 requires 10% down
43%
Back-end DTI benchmark
Up to 50% with compensating factors
1.75%
Upfront mortgage insurance
Of the loan amount, financeable
$541,287
2026 loan limit floor
One-unit home, lower-cost counties

The credit tiers, and what each one costs

FHA uses what it calls your Minimum Decision Credit Score. At 580 or above you get maximum financing, which is 3.5 percent of the home's adjusted value. Between 500 and 579, HUD caps the loan at 90 percent of value, so you bring 10 percent. On a $300,000 house that is the difference between $10,500 and $30,000, which makes the 20 or 30 points between you and 580 worth more than almost anything else you could do in the six months before you apply.

If you have thin or no credit file, you are not automatically out. HUD allows borrowers with no traditional credit history to qualify for maximum financing, but the file has to be manually underwritten and you will need to document on-time payment of other bills instead. Expect a slower, more paperwork-heavy approval.

One more thing to know if you are applying in 2026: FHA is still underwriting on Classic FICO. It will begin accepting VantageScore 4.0 and FICO 10T on January 1, 2027, models that can count consistent rent payments, per HUD and FHFA's joint announcement. That helps thin-file buyers later. It does not change the score a lender pulls for you this year. If you are close to the line, the levers that work now are the ordinary ones: paying down card balances and cleaning up reporting errors.

Two debt ratios, not one

Lenders look at your housing payment against your gross income (the front-end ratio) and your total monthly debts against gross income (the back-end ratio). The benchmarks are roughly 31 percent front-end and 43 percent back-end.

Those are benchmarks, not walls. With compensating factors, meaning cash reserves, a long stable job history, or a payment that is not much higher than the rent you already pay, approvals happen at up to 40 percent front-end and 50 percent back-end. What this means practically: a car loan of $450 a month can cost you $70,000 of buying power. If you are inside a year of applying, do not finance a vehicle.

Mortgage insurance is what you pay for the small down payment

Every FHA loan carries two insurance charges. The upfront premium is 1.75 percent of the loan amount, due at closing or rolled into the balance, which is what most buyers do. The annual premium is then split across your twelve monthly payments.

As of LendingTree's September 2026 breakdown, a 30-year FHA loan of $726,200 or less carries an annual premium of 0.50 to 0.55 percent depending on loan-to-value. Above that balance it runs 0.70 to 0.75 percent. On a $350,000 loan, 0.55 percent is about $160 a month.

The duration is the part buyers miss. Put less than 10 percent down and the monthly premium stays for the life of the loan. Put 10 percent or more down and it cancels automatically after 11 years of on-time payments. Most FHA buyers who want out earlier refinance into a conventional loan once they have built enough equity, which is the main structural reason to compare the two before you commit. One piece of good news for 2026: FHA premiums became tax-deductible for qualifying borrowers who itemize, starting with the 2026 tax year.

The 2026 ceiling on what you can borrow

FHA limits are set county by county at 115 percent of the local median sale price, bounded by a national floor and ceiling. For case numbers assigned between January 1 and December 31, 2026, HUD set the one-unit floor at $541,287 and the ceiling at $1,249,125. Two-unit properties run from $693,050 to $1,599,375, and you can use FHA on a duplex if you live in one of the units.

Nearly every county went up this year on the back of home price appreciation. Ten jurisdictions went down, not because prices fell but because the federal government redrew metro area boundaries. If you are shopping near your county's limit, check the current number before you make an offer rather than assuming last year's figure carried over. Alaska, Hawaii, Guam and the U.S. Virgin Islands get further adjustments above the standard ceiling.

The requirements nobody mentions until underwriting

  • Two years of income and employment history

    Time in school or in military service can be documented in place of it.

  • You have to live there

    Primary residences only, and you must occupy the home within 60 days of closing. No rentals, no second homes.

  • The house has to pass an FHA appraisal

    Safety, security and soundness. Single-family homes, condos, townhouses and manufactured homes on a permanent foundation are all eligible.

  • Your down payment can be a gift

    HUD allows the full 3.5 percent to come from a family member, an employer or a charitable organization, which stacks with most local assistance programs.

That last one is the most underused rule in the program. Gift funds and a 3.5 percent minimum together mean the cash barrier is often smaller than buyers assume, especially where employer and nonprofit down payment help is available.

What an FHA loan is not

It is not a first-time buyer program. Nothing in the eligibility rules restricts it to first-timers; it is simply the loan most often used by buyers with smaller down payments or shorter credit histories.

And FHA mortgage insurance is not conventional PMI. PMI comes off when you reach enough equity. FHA's monthly premium comes off after 11 years, or never, depending on what you put down. That single difference is what usually decides the FHA versus conventional question for buyers who could qualify either way.

Where to start if you clear the bar

Pull your score first and see which side of 580 you land on, because that number sets your down payment and nothing else you do changes it quickly. Then add up your monthly debt payments and divide by your gross monthly income; if the answer is above 43 percent, a lender will want to see reserves or a strong job history to go further.

FHA is an insurance program, not a lender, so the rate and the fees are still set by whoever originates your loan, and they vary. Get numbers from more than one before you commit to a single application.