The FHA isn’t a lender. Instead, it operates as a mortgage insurance provider. When homeowners take out a loan that meets its criteria from an FHA-approved lender, that loan gets insured. That insurance pays out to the lender if you stop paying your FHA loan. That means lower risk, which can translate to looser requirements and more favorable terms for you as the borrower. 

‍

FHA 101

FHA stands for the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development (HUD). The FHA has been insuring mortgages throughout the country since Congress created it in 1934, with more than 50 million under its belt to date. 

The FHA isn’t a direct mortgage lender. You can’t go to them to get a home loan like you would a bank or credit union. 

Instead, this Administration provides insurance to FHA-approved lenders. With that approval, the lender gets a guarantee that when they issue an FHA loan, they have some protection. If the homeowner stops paying back their mortgage, the FHA’s insurance will pay out to help that lender recoup some of their losses.

This means that when a mortgage lender underwrites (basically, creates) an FHA loan, they take on less risk than with a conventional mortgage. That incentivizes lenders to loosen their criteria. 

Because of this, FHA loans are a good option for people who might not qualify for a traditional mortgage or who are having a hard time finding an affordable interest rate.

The FHA backs a few different kinds of loans, including 203(k) loans to rehabilitate homes and home equity conversion mortgages (HECMs), or reverse mortgages. The basic FHA mortgage, though, and the kind most borrowers get is the 203(b) mortgage. From here on out, that’s the kind of FHA loan we’ll be discussing. 

Qualifying for an an FHA loan

To qualify for insurance from the FHA, your loan needs to tick certain boxes. Those include some that are specific to your house, some that pertain to you and your financial profile, and general rules.

FHA loan qualifying criteria include:

• Loan limits: The FHA sets a maximum amount on its loans based on the geographical area in which the property is located. For most of the country, that loan maximum is $524,225 in 2025. That said, some areas with higher property values have a loan limit all the way up to $1,209,750. You can look up the limit in your specific area with the FHA Mortgage Limits tool from HUD. 
• Down payment amount and borrower credit score: With a credit score of 580 or above, you can get an FHA loan by putting 3.5% down. If your score is 500–579, you can technically qualify an FHA loan if you put 10% down. That said, very few lenders are willing to work with borrowers with a score that low. 
• Debt-to-income ratio: Generally speaking, the FHA recommends that lenders keep the debt-to-income (DTI) ratio for borrowers below a certain percentage. Your DTI ratio measures how much of your monthly income is going to your mortgage (front-end DTI), and to all of your debts, including car payments, student loans, etc. (back-end DTI). The FHA sets its qualifying ratios at 31% for front-end DTI and 43% for back-end DTI. That said, the FHA allows lenders to work with borrowers with a DTI that exceeds either of those thresholds — provided they have “significant compensating factors.” A bigger down payment can be considered one of those factors, for example. 
• Property requirements: The FHA wants to validate that your property is worth what you’re paying for it and meets livability and safety standards. As a result, you’ll need to get a HUD-approved appraiser involved if you want an FHA loan. Also, you can buy a multi-family property with up to four units with an FHA loan. Even if you plan to rent out some units, you need to live at the property. The FHA calls this an occupancy rule. 

Finally, getting a FHA loan means agreeing to its mortgage insurance premiums. 

Mortgage insurance premiums and FHA loans

The FHA is largely self-funded. One of the primary ways it makes its money is through its mortgage insurance premiums (MIPs). This is pretty similar to the private mortgage insurance (PMI) you’ll have to pay if you put less than 20% down with a conventional mortgage. 

First, there’s an upfront MIP of 1.75% of your total loan amount. You can pay this in cash at closing, but some lenders let you roll it into your loan amount. 

Then, you’ll have a recurring MIP. If you put less than 10% down, you’re stuck with this payment for your entire loan term. With 10% or more down, you might be able to ditch your monthly MIP after 11 years.

Next steps: Find an FHA loan lender and explore FHA loan rates today

If you have a good credit score and enough for a down payment of 10% or more, an FHA loan might not be the best option for you, per the Consumer Financial Protection Bureau (CFPB). But if your credit score isn’t ideal and you don’t have much saved up, an FHA loan could be your most affordable path to homeownership. 

If you’re in the latter camp and you’re interested in this kind of federally backed loan, your next step is to explore rates and find a lender. You can see what kind of FHA loan mortgage rates are available today — and what’s available to you based on your financial profile — with our interactive FHA rate tables. 

Once you have an idea of the current rate environment, you can start looking at specific lenders. HUD maintains a list of FHA-approved lenders. You can explore your options in your state, county, or even zip code. 

‍