FHA loans have specific requirements set by the Federal Housing Administration. These requirements cover credit, income, debt ratios, down payment, and the property itself. Meeting them is how you qualify.
This guide breaks down each requirement for 2026. Some are hard rules. Others have flexibility depending on your overall profile. Understanding the difference helps you know where you stand. For Houston-specific details including loan limits and local programs, see our FHA loans in Houston guide.
Credit Score Requirements
FHA has tiered credit requirements based on your down payment:
| Credit Score | Minimum Down Payment | Notes |
|---|---|---|
| 580 or higher | 3.5% | Standard FHA terms |
| 500 to 579 | 10% | Higher down payment required |
| Below 500 | N/A | Does not qualify for FHA |
These are FHA minimums. Individual lenders often set higher requirements. Most lenders want to see at least 620 for smoother approval. Some will go down to 580. Finding a lender who works with lower scores takes more effort but is possible.
Down Payment Requirements
The minimum down payment depends on your credit score:
- 3.5% down with a credit score of 580 or higher
- 10% down with a credit score between 500 and 579
On a $350,000 home:
- 3.5% down = $12,250
- 10% down = $35,000
Where Down Payment Can Come From
FHA allows flexible sourcing for your down payment:
- Personal savings: Bank accounts, investment accounts
- Gift funds: From family members, employers, or close friends
- Down payment assistance: State, city, and nonprofit programs
- Employer assistance: Some employers offer homebuying benefits
- 401k loans: Borrowing from your retirement account
Income Requirements
FHA does not set a minimum income. What matters is whether your income supports the loan payment. Lenders verify income through:
- W-2 employees: Pay stubs (30 days) and W-2s (2 years)
- Self-employed: Tax returns (2 years) and profit/loss statements
- Additional income: Bonuses, commissions, overtime (2-year history required)
Employment History
FHA guidelines require a 2-year employment history. This does not mean 2 years at the same job. Consistent employment in the same field counts. Recent graduates can use education in lieu of employment history in some cases.
Debt-to-Income Ratio (DTI)
DTI measures how much of your monthly income goes toward debt payments. FHA looks at two ratios:
| Ratio Type | What It Measures | FHA Guideline |
|---|---|---|
| Front-end ratio | Housing costs / gross income | 31% or less |
| Back-end ratio | All debt payments / gross income | 43% or less |
Housing costs include principal, interest, property taxes, homeowners insurance, HOA fees, and mortgage insurance.
All debt payments include housing costs plus car loans, student loans, credit cards, personal loans, and any other monthly debt obligations.
DTI Flexibility
FHA allows higher DTI ratios with compensating factors:
- Cash reserves: 3+ months of mortgage payments saved
- Minimal payment increase: New payment is similar to current rent
- Strong residual income: Money left over after all obligations
- Excellent payment history: No late payments on current debts
With strong compensating factors, some lenders approve DTI ratios up to 50% or even 57%. This is not guaranteed. Each file is evaluated individually.
Front-end: $2,100 / $7,000 = 30% (passes)
Back-end: $2,900 / $7,000 = 41% (passes)
Property Requirements
FHA loans are for primary residences only. The property must meet FHA minimum property standards, which focus on safety and livability.
1 Safety Standards
- + Roof must be in good condition with at least 2 years of remaining life
- + No peeling or chipping paint (lead paint concern for pre-1978 homes)
- + Handrails required on stairs with more than 3 steps
- + No exposed wiring or electrical hazards
- + Heating system must be functional
2 Structural Requirements
- + Foundation must be sound with no major cracks
- + No standing water in basement or crawl space
- + Attic and crawl spaces must be accessible for inspection
- + No evidence of termite damage or active infestation
3 Livability Standards
- + Working plumbing with hot and cold water
- + Functional kitchen with stove/oven connection
- + At least one bathroom with toilet, sink, and tub/shower
- + All utilities must be operational at inspection
These standards are checked during the FHA appraisal. If issues are found, repairs may be required before closing. In some cases, repairs can be completed after closing using an escrow holdback.
2026 FHA Loan Limits
FHA loan limits vary by county. For 2026:
| Area Type | Single Family | Duplex |
|---|---|---|
| Low-cost areas (floor) | $541,287 | $693,103 |
| High-cost areas (ceiling) | $1,249,125 | $1,598,875 |
| Harris County, TX | $524,225 | $671,200 |
If your purchase price exceeds the FHA limit for your county, you will need conventional financing or a jumbo loan.
FHA Requirements Checklist
Quick Reference: Do You Qualify?
- + Credit score 580+ (or 500+ with 10% down)
- + 3.5% down payment available
- + DTI ratio under 43% (or compensating factors)
- + 2-year employment history
- + Verifiable income documentation
- + Property is your primary residence
- + No delinquent federal debt
- + No recent bankruptcy (2 years) or foreclosure (3 years)
Waiting Periods After Financial Events
FHA has waiting periods after certain financial events:
| Event | Waiting Period | Notes |
|---|---|---|
| Chapter 7 Bankruptcy | 2 years from discharge | Re-established credit required |
| Chapter 13 Bankruptcy | 1 year into repayment plan | Court approval and on-time payments |
| Foreclosure | 3 years from completion | Re-established credit required |
| Short Sale | 3 years from sale date | Same as foreclosure |
| Deed in Lieu | 3 years from transfer | Same as foreclosure |
Extenuating circumstances like job loss due to medical emergency or death of a wage earner may reduce waiting periods. Documentation is required.
Common Reasons FHA Loans Get Denied
- Credit issues: Too many recent late payments, collections, or judgments
- Income verification: Cannot document income adequately
- DTI too high: Debt obligations exceed guidelines
- Property condition: Home fails FHA appraisal standards
- Employment gaps: Cannot show stable work history
- Insufficient funds: Not enough for down payment and closing costs
Most denials can be addressed. If one issue is holding you back, a clear plan to fix it makes approval possible in the future. First-time buyers can find step-by-step guidance in our FHA first-time buyer guide.
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