3.5% down with a 580 score, and a down payment that can come entirely from a gift. The most forgiving way to buy a first home.
FHA is not a loan for people with bad credit. It is a loan for people whose file does not fit the conventional box — a thin credit history, a recent job change, a debt ratio that runs high because of student loans, or a down payment that came from family rather than years of saving.
The Federal Housing Administration does not lend money. It insures the loan against default, and that insurance is what lets a lender accept a 580 score and 3.5% down on a house they would otherwise decline. You pay for that insurance, which is the trade-off at the centre of every FHA decision.
It is a primary residence program. You cannot buy a rental or a second home with it, and you are expected to occupy the property within 60 days of closing.
| Requirement | FHA purchase |
|---|---|
| Down payment | 3.5% with a 580+ score |
| Lower credit option | 10% down with a 500–579 score |
| Source of down payment | 100% may be gifted |
| Debt-to-income | Up to 57% with compensating factors |
| Seller contribution | Up to 6% toward closing costs |
| Occupancy | Primary residence only |
FHA sets these floors. Individual lenders frequently apply stricter overlays on top of them, particularly on credit score.
FHA limits are set county by county. For 2026 the national floor is $541,287 for a one-unit property and the ceiling in high-cost areas is $1,249,125.
Los Angeles County sits at the ceiling, so a buyer in Glendale, Burbank or Pasadena is working with the $1,249,125 figure rather than the floor. That is a meaningful amount of buying power for a program that only asks 3.5% down — and it is the reason FHA remains viable in Southern California at price points where people assume it is not.
Every FHA loan carries two premiums. An upfront premium of 1.75% of the loan amount, almost always financed into the balance rather than paid at closing. And an annual premium, charged monthly, which on most purchase loans runs 0.55% a year.
How long you pay the annual premium comes down to one number: your down payment.
Less than 10% down → premium for the life of the loan
10% or more down → premium for 11 years
That is the single most consequential fact about FHA financing, and it is why FHA is often best understood as a way in rather than a place to stay. Many borrowers buy with FHA, build equity, and refinance into a conventional loan where mortgage insurance ends on its own. Our conventional loan page explains exactly when that happens.
Program parameters shown are current as of publication and are subject to change. FHA loan limits are reset annually. All financing is subject to credit approval, property review and program availability.
No obligation — find the right fit for your situation.