Definition
"FHA requirements" refers to the set of qualifications and property standards set by the Federal Housing Administration (FHA) that borrowers and homes must meet to be eligible for FHA‑insured loans. These requirements make mortgage financing more accessible—especially for first‑time, low‑to‑moderate income, or lower‑credit buyers—by allowing looser credit and down payment rules than many conventional loans while protecting lender risk through mortgage insurance.
Key FHA requirements
- Credit score & down payment: Borrowers with a credit score of 580+ can qualify with a minimum 3.5% down payment. Scores 500–579 typically require at least a 10% down payment. Note: many lenders impose overlays and may require higher scores.
- Occupancy: The financed property must be the borrower’s primary residence. Borrowers must occupy the home within 60 days of closing and generally live there for at least one year.
- Employment & income: Applicants must show stable employment and sufficient income to repay the loan. FHA underwriting usually expects a debt‑to‑income ratio below about 43%, though exceptions exist with compensating factors (see debt-to-income-ratio).
- Property eligibility & condition: Homes must meet FHA minimum property standards for safety, security, and soundness. An FHA‑approved appraiser inspects heating, plumbing, electrical systems and structural integrity. Properties needing significant repairs must usually be fixed before closing. Eligible property types include single‑family homes, townhomes, approved condos, manufactured homes, and up to four‑unit owner‑occupied properties.
- Loan limits: FHA sets regional loan limits based on property type and location. For 2025, single‑family limits range roughly from $498,000 up to over $1,000,000 in high‑cost areas.
- Mortgage insurance premium (MIP): FHA loans require an upfront MIP (commonly 1.75% of the loan amount paid at closing or financed into the loan) plus annual premiums paid monthly—this insurance enables FHA’s more flexible lending standards. See mortgage-insurance-premium.
- Legal residency: Borrowers must have a valid Social Security number and be lawful U.S. residents (including permanent residents and certain non‑permanent eligible residents).
How FHA requirements are applied — real examples
- A first‑time buyer with a 590 credit score and limited savings can use an FHA loan with a 3.5% down payment to purchase sooner than waiting to save 20% for a conventional loan.
- A low‑income family can buy an FHA‑approved condominium as their primary residence if the unit and the condo project meet FHA property standards.
- An investor/homeowner can buy a duplex with an FHA loan, live in one unit and rent the other to help cover the mortgage—owner occupancy is required.
- A buyer in a high‑cost metro area can access higher FHA loan limits that reflect local prices, enabling purchase of a pricier single‑family home than standard limits allow.
- If an FHA appraiser finds a broken furnace or major structural issues, the loan approval will typically be conditioned on repairs completed before closing, which may require seller or borrower action.
Why FHA requirements matter
FHA requirements strike a balance between widening homeownership opportunities and protecting the mortgage system. By allowing lower down payments and more flexible credit standards, FHA loans help buyers who might not qualify for conventional mortgages. At the same time, occupancy rules, property standards, and mortgage insurance reduce lender risk and help ensure homes are safe and livable.
Quick summary
In short, "FHA requirements" are the borrower, property, and loan rules set by the Federal Housing Administration for FHA‑insured mortgages. They cover credit scores and down payments, occupancy, income and debt‑to‑income, property condition and eligible property types, regional loan limits, mortgage insurance premiums, and legal residency. These requirements make homeownership attainable for many buyers who need lower down payments or more forgiving credit standards, while maintaining safeguards through inspections and insurance.
