Qualifying for a mortgage can be challenging, but choosing one backed by the Federal Housing Administration (FHA) makes it easier. Not only do these loans have looser credit score requirements than most conventional loans, they also allow for relatively small down payments. The exact amount you’ll need to put down depends on your credit score, though, so it’s worth knowing the details. 

Zooming out: FHA loans and what they mean for borrowers

The Federal Housing Administration, or FHA, is a part of the U.S. Department of Housing and Urban Development (HUD). One of its key functions is to insure loans. That means that if the borrower defaults on (i.e., fails to repay) the loan, the FHA steps in to help the lender make up some of its losses. In short, FHA backing lowers the risk for lenders.

To clarify, the FHA doesn’t directly offer mortgages. Instead, it approves and then insures loan originators, who in turn offer FHA loans. You can search for FHA lenders in your area on the HUD website. 

With FHA backing lowering risk for lenders, home loans become available to a wider range of borrowers. This, in turn, increases access to housing for Americans and people with legal residency in the States. 

Specifically, FHA loans come with looser eligibility requirements than a lot of conventional loans (or ones that aren’t backed by a U.S. government agency like the FHA). To be eligible for this kind of loan, you generally need:

• A steady income
• A credit score of at least 500; 580 or above lets you put less money down
• A debt-to-income (DTI) ratio of 43% or less, although you can go up to 50% with certain compensating factors like a large amount in savings
• A plan to live in the house you’re buying (you can’t use these loans for vacation/investment properties)
• A house that meets HUD’s minimum property standards, which have to be validated by an appraiser

On top of that, you need to have a big enough down payment.

FHA loan down payment: Tiers based on your credit score

The FHA largely operates on the income it generates from mortgage insurance (more on that in a minute). But in order to keep turning a profit, it needs to keep its payouts to lenders down. That means setting up loan requirements so that most borrowers who get approved are actually able to repay their mortgage. 

If you have a history of not managing debt particularly well, then, the FHA is going to want a bigger down payment from you. Don’t panic, though. You’re still well below the 20% threshold most people think of here. 

Specifically, FHA down payment requirements are as follows: 

To clarify here, loan-to-value (LTV) ratio measures, as its name suggests, your total loan amount against the value of your house. If you’re buying a $400,000 home and putting $20,000 down, for example, you’d have a loan amount of $380,000. Your LTV ratio is 95% (380,000 / 400,000). 

Your FHA loan down payment could be even less if you have a credit score of 580 or above. In that case, the minimum 3.5% down payment on your $400,000 house would be $14,000. 

Unless you’re tight on cash, you shouldn’t necessarily lean into that minimum. Lenders see higher LTV ratios as bigger risks — and charge more in interest to make up for it. Putting down as much as you can (while preserving your emergency fund and planning for home maintenance costs) helps you get a lower rate. 

What people in the 500–579 credit score range should know

If you’re in the under-580 club, FHA loans theoretically give you a way to get into a house. We should warn you, though, that the majority of lenders don’t work with borrowers with credit scores this low. 

Each lenders sets its own credit score minimum — and 600 or 620 are fairly common thresholds, even among FHA lenders. A lot of lenders won’t go below their internal credit score minimum, which makes it tricky to find a loan option for you. 

Here are a few lenders that explicitly state that they work with borrowers in your credit score range:

• Freedom Mortgage (550 minimum) 
• Guild Mortgage (540 minimum)
• NOVA Home Loans (550 minimum)

As that small sample size illustrates, it’s pretty tough — if not impossible — to find lenders that want to work with a borrower who has a credit score closer to the 500 floor. 

You should also know that your lower credit score probably means you’ll have to pay more in interest. Working on your credit score before applying for a mortgage can help you get a lower rate, saving a lot of money in the long haul. 

Other requirements with FHA loans

In additional to the FHA loan down payment requirement, there are a couple of other factors that come with this kind of loan: 

• Mortgage insurance. As we said before, the FHA is largely self-funded through its mortgage insurance premiums (MIPs). If you go with the 3.5% down payment option, you probably won’t be able to remove this added monthly cost unless you refinance. 
• Loan limits. The FHA sets caps on how big the loan can be based on the area. In 2025, these loan limits are $524,225 for a lot of areas but range up to $1,209,750 in high-priced markets. 

If you think you can handle the FHA loan down payment requirement and you think this kind of loan might be right for you, you can start exploring FHA loan rates today. We keep our rate tables continually updated to show you what’s on offer.

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