What is an FHA loan?
An FHA loan is a mortgage insured by the Federal Housing Administration. It's designed to help more people become homeowners by offering lower down payments, more flexible credit requirements, and more forgiving underwriting guidelines than conventional loans.
Here's what that means in plain English: if your credit isn't perfect, or you haven't saved up a huge down payment, an FHA loan might be the path that gets you into a home.
FHA loans are especially popular with first-time buyers, but they're not limited to first-timers. Anyone who meets the eligibility requirements can use an FHA loan.
One thing to know: while the FHA insures the loan, they don't actually lend the money. I work with FHA-approved lenders to find you the best rate and terms. Since guidelines and pricing vary between lenders, having a broker compare your options is a real advantage.
Why consider an FHA loan?
Low down payment — just 3.5%
With a credit score of 580 or higher, you can put down as little as 3.5% of the purchase price. On a $400,000 home, that's $14,000 instead of $80,000 at 20%.
Flexible credit requirements
FHA loans accept credit scores as low as 500 (with 10% down) or 580 (with 3.5% down). If your credit has taken a hit, this program gives you a realistic path to homeownership.
Higher debt-to-income ratios allowed
FHA guidelines are more lenient on DTI, often allowing ratios up to 50% or higher with compensating factors. That means more of your income can go toward qualifying.
Gift funds welcome
Your entire down payment can come from a gift — from a family member, employer, or approved down payment assistance program. Conventional loans have stricter rules around gift funds.
Assumable loans
FHA loans are assumable, meaning a future buyer could take over your mortgage at your rate. In a high-rate environment, this can make your home more attractive to buyers down the road.
FHA vs. conventional loans
| Feature | FHA Loan | Conventional Loan |
|---|---|---|
| Down Payment | 3.5% (580+ credit) or 10% (500-579 credit) | 3-20% |
| Credit Score | 500 minimum | 620 minimum |
| Mortgage Insurance | Upfront MIP (1.75%) + annual MIP (for life of loan) | PMI until 20% equity, then removable |
| Loan Limits (2026) | $541,287 floor / up to $1,249,125 in high-cost areas | $832,750 (most areas) |
| DTI Ratio | Up to 50%+ with compensating factors | Typically capped at 45% |
| Property Types | Primary residence only | Primary, second home, investment |
| Gift Funds | 100% of down payment can be gifted | Restrictions apply |
| Seller Concessions | Up to 6% | 3-6% |
An FHA loan might be right for you if...
- •Your credit score is below 680. FHA loans are purpose-built for borrowers with less-than-perfect credit. Even scores in the 500-579 range can qualify with a 10% down payment.
- •You have limited savings for a down payment. At 3.5% down with gift funds allowed, FHA makes homeownership accessible even if your savings account is modest.
- •You've had a recent credit event. Bankruptcy, foreclosure, or short sale? FHA's waiting periods are shorter than conventional (2 years after bankruptcy, 3 years after foreclosure), giving you a faster path back.
- •You're a first-time homebuyer. FHA is one of the most popular programs for first-time buyers, and it pairs well with state and local down payment assistance programs.
- •Your debt-to-income ratio is higher. If student loans, car payments, or other debts push your DTI above conventional limits, FHA's more flexible guidelines can help.
Let's talk about mortgage insurance.
This is the part of FHA loans that gets the most questions — and the most confusion. Here's how it works:
Upfront Mortgage Insurance Premium (UFMIP): 1.75% of the loan amount, paid at closing. It's usually rolled into the loan, so you don't need to bring extra cash.
Annual Mortgage Insurance Premium (MIP): Ranges from 0.15% to 0.75% of the loan balance per year, split into monthly payments added to your mortgage. For most borrowers putting 3.5% down, MIP stays for the life of the loan.
The honest take: MIP is the trade-off for getting into a home with a lower down payment and more flexible credit. For many buyers, it's worth it — especially when you factor in rising rents and the equity you're building. And down the road, you can always refinance into a conventional loan to drop mortgage insurance once your equity and credit improve.
I'll always show you the total monthly cost — including MIP — so there are no surprises.
What you should know about FHA loans
Down payment: 3.5% with a credit score of 580 or higher. 10% with a score between 500-579. Down payment can come entirely from gift funds.
Credit requirements: Minimum 500 for FHA eligibility. Most lenders prefer 580+ for the 3.5% down payment option. I work with lenders across the credit spectrum to find you a match.
Loan limits (2026): The FHA floor is $541,287 for single-family homes in standard-cost areas. High-cost areas can go up to $1,249,125. Clark County's exact limit falls within the Portland-Vancouver MSA — I can confirm your specific limit on our first call.
Property requirements: FHA has minimum property standards that the home must meet, verified through an FHA appraisal. The home must be your primary residence — FHA doesn't cover second homes or investment properties.
Waiting periods after credit events: 2 years after a Chapter 7 bankruptcy (1 year for Chapter 13 with court approval), 3 years after a foreclosure. These are shorter than conventional timelines.
Seller concessions: Sellers can contribute up to 6% of the purchase price toward your closing costs — a significant advantage, especially in a buyer's market.
The FHA loan process with Jeff
Free consultation
We talk about your situation — credit, income, savings, goals. I'll tell you whether FHA is the right fit or if another program might serve you better.
I find the right FHA lender
Not all lenders price FHA loans the same way. As a broker, I compare FHA offerings across multiple lenders to find you the best rate and lowest fees.
Pre-approval
I get you pre-approved so you know exactly what you can afford and sellers take your offer seriously.
House hunting & FHA appraisal
Once you find a home, the FHA appraisal checks both the value and the condition of the property. I coordinate with your agent and the appraiser to keep things moving.
Underwriting & processing
My team manages the documentation and lender communication. You'll know what's happening at every step.
Closing day
You sign the papers, get the keys, and officially become a homeowner.