FHA Loan Requirements in Houston

To qualify for an FHA loan in Houston you need a 580 credit score at up to 96.5% loan to value (500 to 579 at up to 90%), a debt-to-income ratio up to 43% as a standard guideline (up to 57% with automated underwriting), steady two-year income, and a primary residence that passes an FHA appraisal. FHA loans also require mortgage insurance.

FHA is one of the most forgiving mortgage programs available, which is why it is the first stop for many Houston first-time and credit-rebuilding buyers. The requirements are more flexible than most people expect. This page walks through each one so you can see exactly what you need before you talk to a lender.

Debt to Income Requirement

Debt to income is the number that usually decides how much house you qualify for, and it is also the number most people calculate wrong about themselves, almost always in the direction that talks them out of calling.

The first thing worth sorting out is which income the ratio runs on. Lenders use your gross monthly income, meaning what you earn before taxes and before anything comes out for benefits or retirement, and not the amount that actually lands in your account on payday. Most people naturally reach for the take home number, because that is the money they live on, and running the same debts against a smaller income makes the ratio look much worse than the one an underwriter would come up with.

The second thing is which bills count, and the list is shorter than people expect. Underwriting looks at the debts that show up on your credit report, so things like a car payment, the minimum on your credit cards, student loan payments, personal loans, and any child support or alimony. To that it adds the housing payment on the home you are buying, including the property taxes, the homeowners insurance, and any HOA dues. Your utilities do not count, and neither does your phone bill, your groceries, your car insurance, your health insurance, your subscriptions, or your daycare, even though those are real money leaving your account every month.

Those two things matter together, because they both push the same way. Someone estimating their own ratio tends to divide by a smaller income and to count bills that were never going to be counted, and the number that comes out can look nothing like the one that comes back from underwriting. I have had people tell me they knew they would not qualify, and the ratio we actually ran was comfortably inside the program.

It is also worth knowing that a published maximum is not one fixed number. The ceiling moves by loan program, and on most programs it moves again depending on whether your file goes through automated underwriting or gets reviewed by hand. Strengths elsewhere in your file, such as reserves or a longer credit history, can also support a higher ratio than the standard guideline suggests. So a ratio that is over the limit on one program is not necessarily over the limit on another.

The last piece is the useful one, which is that of all the things underwriting looks at, this is the one that tends to move fastest. Paying off a small balance removes that minimum payment from the calculation once it reports, an installment loan with only a few payments left is often left out entirely, and coming off someone else's credit card as an authorized user takes their minimum payment off your ratio. Whether any of that helps depends on your file, and it is worth a conversation before you decide you are out. If you have run the numbers yourself and did not like what you saw, please call me and let me run them the way a lender will, because that is a quick conversation and it changes the answer more often than you would think.

Credit Score Requirement

Credit is where FHA stands apart from conventional financing. There are two tiers that decide how much you bring to closing.

• 580 and above: FHA applies its standard minimum, which puts the loan at up to 96.5% loan to value. This is where most FHA buyers land.
• 500 to 579: FHA still insures the loan, but it caps you at 90% loan to value. Fewer lenders work in this range, and you often need a clean recent payment history.
• Below 500: You do not qualify for FHA yet. Scores in the low 500s can often be raised above 580 in a few months with a focused plan, which brings the loan back to the 96.5% ceiling.

Lenders use your middle score from the three bureaus, not your lowest or highest. FHA also allows for credit events that block conventional approval, including past collections, charge-offs, and prior bankruptcies or foreclosures once you complete the waiting period. If your score is close to 580, ask before assuming you do not qualify.

Down Payment Requirement

The minimum FHA down payment is 3.5% of the purchase price for borrowers with a 580 or higher credit score. On a $300,000 home that is $10,500. Borrowers with scores between 500 and 579 are capped at 90% loan to value.

The down payment does not have to come entirely from your own savings. FHA allows the full amount to come from a documented gift from a family member, and it pairs with Houston and Texas down payment assistance programs that can cover most or all of the required amount. Read more in the Houston first-time homebuyer guide.

Debt-to-Income (DTI) Requirement

Your debt-to-income ratio compares your monthly debt payments to your gross monthly income. FHA is more flexible here than conventional financing. Lenders approve DTI up to 43% as a standard guideline, and automated underwriting can approve up to 57% on files with strong compensating factors such as cash reserves, a solid history of on-time rent payments, or residual income.

Carrying student loans, a car payment, and some credit card balances does not automatically disqualify you. This flexibility matters in Houston, where property tax rates run 2% to 2.3% of assessed value and homeowner insurance premiums are among the highest in the country. Both taxes and insurance are included in your DTI calculation, so FHA's higher allowance often makes the difference for local buyers.

Mortgage Insurance (MIP) Requirement

FHA loans require mortgage insurance, and it works differently than it does on a conventional loan. There are two premiums.

Premium	Standard Amount	Details
Upfront MIP	1.75%	Charged at closing, usually rolled into the loan
Annual MIP	~0.55%	Paid monthly, stays for the life of the loan above 90% loan to value

Upfront MIP is 1.75% of the loan amount, charged at closing. Most borrowers roll it into the loan balance rather than paying cash, so it raises the balance slightly without adding to your out-of-pocket cost at closing.

Annual MIP runs around 0.55% of the balance for most buyers, split into monthly payments. The exact figure depends on your loan amount, term, and down payment.

Income and Employment Requirement

FHA has no minimum or maximum income limit. What lenders want to see is stable, documentable income that supports the payment.

• Two-year work history. Lenders look for a reliable two-year employment record. Gaps and job changes are workable, especially within the same field.
• Self-employed income. Self-employed borrowers qualify with two years of tax returns. If your returns understate your income because of business write-offs, other programs may fit better.
• Documentation. Expect to provide pay stubs, W-2s, tax returns, and bank statements so the lender can verify your income and assets.

If your tax returns do not reflect your true earnings, see self-employed mortgage options in Houston. Not sure what to gather before you apply? Start with the document checklist for your income type.

Property and Appraisal Requirement

FHA loans come with property standards that protect you as the buyer. Every FHA purchase requires an appraisal from an FHA-approved appraiser, and that appraisal does two jobs. It sets the market value, and it confirms the home meets HUD minimum property standards for safety, security, and soundness.

In practice, the appraiser checks that the roof is functional, the major systems work, there is no exposed or hazardous wiring, water heaters and heating work, access is safe, and there are no major structural or health hazards like standing water or peeling lead paint in older homes. Houston has a large stock of homes built before 1980, so these checks matter more here than in newer subdivisions.

If a home needs repairs to pass, the seller can complete them before closing, or you can use the FHA 203(k) renovation loan to finance the purchase and the repairs in a single loan.

Occupancy and Loan Limit Requirements

Primary residence. FHA loans are for owner-occupied homes. You need to move in within 60 days and live there as your main home. FHA does not finance pure investment properties, though you can buy a two-, three-, or four-unit building, live in one unit, and rent the others.

Loan limit. FHA sets a maximum loan amount for every county, and HUD updates those limits each year based on local median home prices. Harris County and the greater Houston metro use the standard limit, which covers the majority of homes on the market. Because the number changes annually, verify the current single-family FHA limit for Harris County at hud.gov, or ask me and I will pull the figure that applies to your purchase. Two-, three-, and four-unit primary residences have higher limits.

Who Qualifies for an FHA Loan

FHA is the best fit for several common situations in Houston.

• First-time buyers with limited savings, since FHA insures up to 96.5% loan to value.
• Buyers rebuilding credit with scores in the 580 to 640 range that fall below conventional thresholds.
• Buyers with higher DTI from student loans, car payments, or credit cards, since FHA allows more debt relative to income.
• Buyers recovering from a bankruptcy or foreclosure who have completed the FHA waiting period.
• House hackers who want to buy a two- to four-unit property, live in one unit, and rent the rest.

Frequently Asked Questions

Related Resources

• FHA Loans Houston - The complete FHA program guide and process
• FHA vs Conventional Houston - Side-by-side comparison to pick the right program
• First-Time Homebuyer Houston - Down payment assistance and first-time programs
• USDA Loans Houston - Zero-down financing for eligible areas
• Houston Mortgage Calculator - Estimate your payment with taxes and insurance
• Denied a Mortgage? - Second-chance and non-QM programs after a decline
• What Changed for FHA Borrowers in 2026 - What moved on the FHA side this year