To qualify for an FHA loan in Houston you need a 580 credit score for 3.5% down (500 to 579 with 10% down), a debt-to-income ratio up to 43% to 50%, 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.
FHA Requirements at a Glance
Credit Score: 580+ for 3.5% down (500-579 with 10% down)
Down Payment: 3.5% minimum
Max DTI: 43-50% with compensating factors
Mortgage Insurance: 1.75% upfront + ~0.55% annual
Occupancy: Primary residence only
Credit Score Requirement
Credit is where FHA stands apart from conventional financing. There are two tiers that decide your down payment.
- 580 and above: You qualify for the standard 3.5% down payment. This is where most FHA buyers land.
- 500 to 579: You can still get an FHA loan, but you need 10% down. 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 down payment back to 3.5%.
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 need 10% down, which is $30,000 on the same home.
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 up to 50% or higher 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 if under 10% down |
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.
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 who need the low 3.5% down payment.
- 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
What credit score do you need to qualify for an FHA loan in Houston?
You need a minimum middle credit score of 580 to qualify for an FHA loan with the standard 3.5% down payment. Borrowers with scores between 500 and 579 can still qualify with 10% down. Lenders use your middle score from the three bureaus, not your lowest or highest. FHA also allows past collections, charge-offs, and prior bankruptcies or foreclosures once you complete the waiting period. If your score is close to 580, ask a loan officer before assuming you do not qualify.
What is the minimum down payment for an FHA loan?
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 need 10% down. The funds can come from your own savings, a documented gift from a family member, or an approved Houston down payment assistance program.
What is the maximum DTI for an FHA loan in Houston?
FHA allows a debt-to-income ratio up to 43% as a standard guideline and up to 50% or higher with strong compensating factors such as cash reserves, a solid rent payment history, or residual income. High Houston property taxes and insurance premiums push DTI higher than the same home price would in other states, so FHA's flexible DTI often makes the difference for local buyers.
Does FHA require mortgage insurance?
Yes. FHA loans require two mortgage insurance premiums. An upfront premium of 1.75% of the loan amount is charged at closing and is usually rolled into the loan. An annual premium of around 0.55% of the balance is split into monthly payments. With less than 10% down, the annual premium stays for the life of the loan and can only be removed by refinancing into a conventional loan once you have enough equity.
What are the FHA property and appraisal requirements?
The home must be your primary residence and pass an FHA appraisal performed by an FHA-approved appraiser. The appraisal sets the value and confirms the property meets HUD minimum property standards for safety and soundness, including a working roof, functional systems, no exposed wiring, safe access, and no major hazards. Homes that need repairs can still work through the FHA 203(k) renovation loan, which finances the purchase and repairs in one loan.
What income and employment do you need for an FHA loan?
FHA has no minimum or maximum income limit. Lenders want to see a reliable two-year work history, though gaps and job changes are workable, especially within the same field. Self-employed borrowers qualify with two years of tax returns. Lenders verify income with pay stubs, W-2s, tax returns, and bank statements to confirm you can support the payment.
Is there an FHA loan limit in Houston?
Yes. FHA sets a maximum loan amount for every county, and HUD updates the limit each year based on local median home prices. Harris County and the Houston metro use the standard limit, which covers the majority of homes on the market. Because the figure changes annually, verify the current single-family FHA limit for Harris County at hud.gov before you shop. Two-, three-, and four-unit primary residences have higher limits.
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
- FHA Requirements 2026
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