FHA Loan Requirements in 2024 (2024)

Important FHA Guidelines for Borrowers

The FHA, or Federal Housing Administration, provides mortgage insurance on loans made by FHA-approved lenders. FHA insures these loans on single family and multi-family homes in the United States and its territories. It is the largest insurer of residential mortgages in the world, insuring tens of millions of properties since 1934 when it was created.

FICO® score at least 580 = 3.5% down payment.
FICO® score between 500 and 579 = 10% down payment.
MIP (Mortgage Insurance Premium ) is required.
Debt-to-Income Ratio < 43%.
The home must be the borrower's primary residence.
Borrower must have steady income and proof of employment.

About FHA Loans

An FHA Loan is a mortgage that's insured by the Federal Housing Administration. They allow borrowers to finance homes with down payments as low as 3.5% and are especially popular with first-time homebuyers.

FHA loans are a good option for first-time homebuyers who may not have saved enough for a large down payment. Even borrowers who have suffered from bankruptcy or foreclosures may qualify for an FHA-backed mortgage.

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Time to Get Started With an FHA Loan
What Should I Know About Applying for an FHA Mortgage?
How to Use an FHA Home Loan

FHA Credit Requirements for 2024

FHA Loan applicants must have a minimum FICO® score of 580 to qualify for the low down payment advantage which is currently at 3.5%. If your credit score is below 580, the down payment requirement is 10%. You can see why it's important that your credit history is in good standing.

Keep in mind that FHA credit requirements cover more than just your FICO® score; they also determine eligibility based on a borrower’s payment history, bankruptcies, foreclosures, and extenuating circ*mstances that keep applicants from making timely payments.

The Facts About FHA Credit Requirements and FICO® Scores
Do FHA Loan Requirements Apply to All Borrowers?
Your FHA Loan Credit Qualifications

What's a FICO® Score?

The FICO® score is a number that represents a potential borrower's creditworthiness. FICO® is a data analytics company which uses consumer credit files collected from different credit bureaus to compute their scores.

Your FICO® score is reviewed by lenders and is used to determine how likely you are to make timely payments on your mortgage. The higher the score, the better your chances are of getting a lower interest rate on your mortgage.

SEE YOUR CREDIT SCORES FromAll3Bureaus

Do you know what's on your credit report?

Down payment assistance programs make the mortgage process more affordable for eligible applicants who are interested in purchasing a home but need financial help to do so. Money is usually provided in the form of a non-repayable grant, a forgivable loan, or a low interest loan. Homebuyer education courses may be required.

Typically, a property being purchased must serve as the applicant’s primary residence and must be located within a specific city, county, or state. It may also need to fall within a program's maximum purchase price limits. Income limits may apply, and will look something like this (these numbers may not match your program's requirements):

1 person household: $39,050
2 person household: $44,600
3 person household: $50,200
4 person household: $55,750
5 person household: $60,250
6 person household: $64,700
7 person household: $69,150
8 person household: $73,600

Household income is normally defined as all income received by household members (18 years or older) who will be living in the home, even if they are not on the mortgage.

Down Payment Assistance for FHA Loans
FHA Loan Down Payment Questions
FHA Home Loans for Single Parents

Down Payment Gifts

Borrowers wishing to purchase a home with an FHA loan may need some help with the down payment. FHA loan rules not only regulate the source of funds in this way, it also governs who may provide such gifts. Be prepared to provide supporting documentation for the source of any financial gift associated with your home loan transaction. Gifts may be provided by:

Borrower's family member
Borrower's employer or labor union
A close friend with a clearly defined and documented interest in the borrower.
A charitable organization.
A governmental agency or public entity with a program providing homeownership assistance to low- or moderate-income families or first-time homebuyers.

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FHA Loan Rules for Down Payment Gift Funds
Down Payment Gifts: What You Need to Know
FHA Loan Down Payments and Their Sources

2024 FHA Loan Limits

The FHA has calculated the maximum loan amounts that it will insure for different parts of the country. These are collectively known as the FHA lending limits. These loan limits are calculated and updated annually. They're influenced by type of home, such as single-family or duplex, and location. Some homebuyers choose to purchase homes in counties where lending limits are higher, or may look for homes that fit within the limits of the place they want to live.

Single	Duplex	Tri-plex	Four-plex
LOW COST AREA
2024 FHA Limits
$420,680	$538,650	$651,050	$809,150

Single	Duplex	Tri-plex	Four-plex
HIGH COST AREA
2024 FHA Limits
$970,800	$1,243,050	$1,502,475	$1,867,275

Do FHA Loans Have Income Limits for Borrowers?
When Do FHA Loan Limits Change?
FHA Loan Limits Facts and Calculations

FHA Closing Costs

While FHA requirements define which closing costs are allowable as charges to the borrower, the specific costs and amounts that are deemed reasonable and customary are determined by each local FHA office.

Lender's origination fee.
Deposit verification fees.
Attorney's fees.
The appraisal fee and any inspection fees.
Lender's origination fee.
Cost of title insurance and title examination.
Document preparation (by a third party).
Property survey.
Credit reports (actual costs).
Transfer stamps, recording fees, and taxes.
Test and certification fees.
Home inspection fees up to $200.

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FHA Home Loan Rules for Closing Costs
When the Seller Wants to Help Pay Your FHA Closing Costs
Can FHA Closing Costs Be Financed?

FHA Loan Checklist

As the buyer and borrower, you will have items on your checklist that are required by your lender, the seller, and even the title company. The closing checklist covers all the fees to be paid, the information to be provided, and the disclosures to be signed before the title is conveyed to you.

Identification
All parties at the closing should have valid ID.
Title Insurance Policy
You must pay for title insurance that guarantees the property is free of previous claims or liens.
Homeowner's Insurance Policy
Before you can close on the property, you need to secure homeowner’s insurance, which insures the property in the case of damage.
Closing Funds
You must bring all funds agreed upon, in the form of a cashier’s check or via electronic wire.

Mortgage Loan Basics for New Borrowerss
How to Pay Your Closing Costs
Ways to Improve Your Credit Ahead of Your Home Loan

MIP (Mortgage Insurance Premium)

FHA insured loans require mortgage insurance to protect lenders against losses that result from defaults on home mortgages. Depending on the terms and conditions of your home loan, most FHA loans today will require MIP for either 11 years or the lifetime of the mortgage.

MIP Rates for FHA Loans Over 15 Years

If you take out a typical 30-year mortgage or anything greater than 15 years, your annual mortgage insurance premium will be as follows:

Base Loan Amount	LTV	Annual MIP
≤ $625,500	≤ 95%	80 bps (0.80%)
≤ $625,500	> 95%	85 bps (0.85%)
>$625,500	≤ 95%	100 bps (1.00%)
> $625,500	> 95%	105 bps (1.05%)

Update:FHA Lowers Mortgage Insurance in 2015
Update:Trump Administration Reverses 2017 MIP Reduction

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FHA Loans and Mortgage Insurance Requirements
FHA vs. Conventional Loans: Mortgage Insurance and Refi Options
FHA Home Loan Basics: Why You May Need an Escrow Account

Debt Ratio for FHA Loans

In order to protect homebuyers from getting into a home they cannot afford, FHA guidelines have been set in place requiring borrowers and/or their spouse to qualify according to set debt-to-income ratios.

These ratios are used to calculate whether or not the potential borrower is in a financial position that would allow them to meet the demands that are often included in owning a home.

FHA Loan Debt-to-Income Ratio Requirements
FHA Mortgage Applications and Debt Ratios
What are Compensating Factors for FHA Loan Approval?

First-Time Homebuyers

If you're' considering buying your first home, there are a number of FHA Loan and other programs that can assist you with your purchase.

Individuals and spouses without ownership of a principal residence during the past three years.
Single parents who have only owned a property with a former spouse while married.
Individuals who are displaced homemakers and have only owned with a spouse.
Individuals who have only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
Individuals who have only owned property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.

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Basic Eligibility Rules for FHA Mortgages
FHA Mortgage Loans for the First-Time Borrower
Helpful Advice for First-Time Homebuyers

FAQs

What are the FHA rules for 2024? ›

FHA's 2024 minimum national loan limit floor of $498,257 for a one-unit property is set at 65 percent of the national conforming loan limit. This floor applies to those areas where 115 percent of the median home price is less than the floor limit.

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What is the DTI limit for FHA in 2024? ›

The FHA recommends a DTI ratio of 43%. In addition, the gross mortgage payment should not exceed 31% of your income. To help you qualify for an FHA loan, lenders may consider other compensating factors, such as large cash reserves or future income potential.

Why would FHA not approve a home? ›

The FHA's three requirements are that a property must be safe, secure, and structurally sound to qualify for one of their loans. Properties cannot have adverse conditions that might imperil the homeowner, and must meet proper building codes. As a buyer, these standards protect you from buying an unsafe property.

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What percentage of FHA loans are denied? ›

In 2022, 9.1% of applicants were denied a home-purchase loan, according to data collected under the Home Mortgage Disclosure Act. However, some loan programs have a higher denial rate than others. Here's how it breaks down. Federal Housing Administration loans: 14.4% denial rate.

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What is the FHA six month rule? ›

If an extended gap is present, the applicant must be employed in the current job for six months, plus show a two-year work history prior to the gap. FHA lenders want to see that: You are qualified for your current position. You are likely to remain in that position or a better one in the future.

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What is the FHA 75% rule? ›

If you're currently in the market looking to buy a triplex or fourplex with FHA financing, you need to see if the property's rents pass the Self-Sufficiency Test. To be “self-sufficient” means that 75% of the property's rents need to cover the monthly payments.

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What is the 2 FHA loan rule? ›

A second FHA loan may be allowable for homebuyers who meet these qualifying criteria: You're relocating for a new job and need a new primary residence. The new home is more than 100 miles away from your current FHA-financed home. You're getting a divorce and you intend to purchase a new home in your name only.

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What will mortgage rates be by end of 2024? ›

Expert predictions for mortgage rates in 2024

In Fannie Mae's latest rate forecast, the government-sponsored enterprise said it expects 30-year fixed rates to end 2024 at 6.4%.

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What is the 5% rule for FHA collections? ›

If you have outstanding collections, your lender may want evidence that you've entered into a repayment plan. If this evidence cannot be obtained, then your lender will have to calculate a monthly payment of 5% of the outstanding balance and calculate that amount into your debt-to-income ratio.

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What is the FHA 75 rule? ›

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What are the new rules for mortgage loans? ›

Under a new rule from the Federal Housing Finance Agency (FHFA), which took effect on May 1^st, borrowers with lower credit ratings and less money for a down payment will qualify for better mortgage rates, while those with higher ratings will pay increased fees.

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