FHA Loans

FHA loans are insured by the Federal Housing Administration. An FHA loan can allow you to buy a home with a credit score as low as 580 and a down payment of 3.5%. With an FHA loan, you may be able to buy a home with a credit score as low as 500, if you pay at least 10% down.

Loan Requirements:

- You can only get a new FHA loan if the home you consider will be your primary residence, which means that it can’t be an investment property or second home.
- You must occupy the property within 60 days of closing.
- An inspection must occur, and the inspection must report whether the property meets minimum property standards.There are a few more specific conditions to qualify, including a down payment amount, mortgage insurance, credit score, loan limits and income requirements. Mostly, the FHA requirements to qualify for a mortgage are the same for DACA recipients. We’ll explore these factors in more depth below.

When should I choose this Loan?

If you're in the market for a loan with lenient credit, lower down payment and low-to-moderate income requirements, an FHA loan might be right for you.

  • FHA Loans have small Down Payments (As low as 3.5%), so they can be ideal for those with low amounts of cash stored.

  • FHA Loans are more lenient towards your credit. You can get a FHA Loan with a credit score as low as 500.


  • Low Down Payment: For many, finding a lump sum of cash large enough to cover the down payment on a house – traditionally 20% – can be a pretty daunting obstacle, and it frequently serves as the biggest roadblock to homeownership. With an FHA loan, however, borrowers with a credit score of 580 or higher can make a minimum down payment as low as 3.5%.

  • Lenient Credit Histories Allowed: While most other loan types will require a minimum credit score of 620, you can qualify for an FHA loan with a credit score of 580. If you can make a 10% down payment, credit scores can be as low as 500, but Rocket Mortgage® has a minimum credit score requirement of 580 for all FHA loans.

  • Better Interest Rates: Mortgage interest rates are dynamic and affected by the state of the economy as a whole, but that doesn’t mean you can’t do anything to bring those rates down. As it is, FHA loans typically offer better, fixed interest rates when compared with other loan types. Adjustable-rate loans are also available.


  • Mortgage Insurance Premiums: FHA loans require both upfront and annual MIPs from borrowers, regardless of how much money you put toward your down payment. You’ll have MIP for the life of your loan unless you make a down payment of 10% or more, in which it will come off the loan after 11 years. The amount you pay for mortgage insurance premiums, will depend on the size of your loan, with your MIP at 1.75% of your loan’s total value. This amount is due at the time of closing or it can be added to your loan’s overall balance.

  • Less Attractive Offers: Buying a house can already be a stressful and competitive process, so it’s important to know what you bring to the table for a seller. Unfortunately, FHA financing does have a more unfavorable stigma attached to it than conventional loans, as the standards for FHA borrowers is less exclusive. Be sure to strategize with your real estate agent or REALTOR® to find other ways to be a competitive buyer in your seller’s eyes.

  • Restrictive Loan Maximums: Depending on how much you want to borrow, an FHA loan may or may not be right for you. Currently, the FHA ceiling, or the highest amount a borrower can take out through the FHA loan program, has been set at $970,800 for a single-family home loan in a high-cost area. For 2022, the FHA floor was set at $420,680 for single-family homes in a low-cost area.

Comparison with Conventional Mortgages







Loan Terms range 8-30 years.

Less options than conventional, but several between 15-30 years



As low as 500 with a 10% down payment; 580 for everything else


$647,200 in most areas; up to $970,800 in high-cost areas for a single unit

$420,680 to $970,800 depending on home location


PMI if down payment is less than 20%; no PMI if down payment is at least 20%.

MIP upfront and monthly throughout the life of the loan (or 11 years with a 10% or more down payment); MIP is usually less expensive than PMI


Fannie Mae or Freddie Mac might buy the loan

Backed by the Federal Housing Administration

Can a Loan Officer Pre-Approve this Loan?

Like with all other Mortgages and loans, a Loan Officer can help you get Pre-Approved for a loan so the lending process can happen smoothly. Water Mortgage is here to help with all your Pre-Approval needs!

Get Pre-Approved for a VHA Loan Today!