Low down payment. Lower-FICO friendly.
Government-backed financing for buyers whose credit or down payment doesn't quite clear Conventional. We run the math both ways — sometimes FHA wins on rate, sometimes Conventional wins on MI cost. You'll see both before you decide.
When FHA beats Conventional — and when it doesn’t
FHA loans are insured by the Federal Housing Administration, which lets lenders approve files that conventional guidelines would price punitively or decline: lower credit scores, higher debt-to-income ratios, thinner savings. The base rate on an FHA loan is often lower than a conventional quote for the same borrower.
The catch is mortgage insurance. FHA charges an upfront premium plus a monthly premium that, in most cases, lasts the life of the loan. For borrowers with strong credit, conventional PMI is usually cheaper and cancellable. That’s why we run every file both ways and show you the total monthly cost of each — not just the rate.
Flexibility built into the program
FHA allows your entire down payment to come from gift funds, accepts non-occupant co-borrowers (a parent co-signing, for example), and tolerates debt-to-income ratios up to 56.9% with compensating factors. Recent credit events are handled more gracefully too — shorter waiting periods after bankruptcy or foreclosure than conventional guidelines require.
There’s also the FHA 203(k), which rolls renovation costs into the purchase loan — useful when the house you can afford needs work. And once you have an FHA loan, the streamline refinance lets you drop your rate later with no appraisal and minimal documentation.
FHA Loans: common questions
What’s the minimum credit score for an FHA loan?
With a 580+ FICO, you qualify for the minimum 3.5% down payment. Scores between 500 and 579 can still be approved with 10% down, though lender overlays vary — we’ll tell you which wholesale lenders will actually take the file.
Is FHA only for first-time buyers?
No. Anyone can use FHA financing for a primary residence. The main restriction is occupancy — FHA loans are for the home you live in, not second homes or investment properties.
Does FHA mortgage insurance ever go away?
If you put down less than 10%, the monthly premium lasts the life of the loan. With 10%+ down it drops after 11 years. The common exit is refinancing into a conventional loan once you have 20% equity — we flag files for that the moment the math works.
Can my down payment be a gift?
Yes — FHA allows 100% of the down payment and closing costs to come from gift funds from a family member, employer, or approved source, documented with a gift letter.
Send us the scenario. We'll tell you if FHA is the right fit — and what it prices at.
No SSN, no credit pull. A licensed broker reviews the scenario and replies by the next business day.
Program features described above are general descriptions of loan programs offered by third-party lenders and are subject to change without notice. This is not an offer of credit or a commitment to lend. All loans are subject to credit approval, income and asset verification, property appraisal, and program eligibility requirements. Not all applicants will qualify. Verified Home LLC is a mortgage broker, not a lender, and arranges loans with third-party providers. NMLS #2693996. Equal Housing Opportunity.