FHA loan

FHA loans,
without the catch.

Friendlier on credit, lighter on down payment, and forgiving on the kind of life events that knock conventional applications offline. We'll also tell you when FHA isn't your best move.

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3.5%

Down payment

580

Min FICO (typical)

57%

Max DTI (case-by-case)

Who it's for

A fit if you're…

Credit in the 580–680 range that doesn't price well on conventional
Higher debt-to-income that a conventional desk would decline
Recovering from a past credit event (BK, short sale, foreclosure) outside required waiting periods
Buying a primary residence, including 2–4 unit owner-occupied

Low 3.5% down

Far less cash to close than most conventional programs, with broader gift-fund flexibility.

Forgiving credit guidelines

FICO floors as low as 580, generous treatment of past credit events once waiting periods are met.

Seller concessions up to 6%

Sellers can contribute meaningfully to your closing costs — often enough to bring cash-to-close near zero.

Streamline refinance later

If rates fall, the FHA streamline refi has reduced documentation and no appraisal in most cases.

Interactive scenario

FHA purchase, $350k home, 620 credit

Est. monthly P&I

$2,844

Loan amount

$50k$3M

Interest rate

1%15%

Term

yrs

5 yrs40 yrs

Monthly P&I

$2,844

Total interest

$573,950

Total paid

$1,023,950

About $12k out-of-pocket gets the keys. The plan: refinance into conventional in 24–48 months once equity passes 20% and drop the monthly MIP.

For illustration only. Numbers are hypothetical and don't represent an offer, rate lock, or guarantee. Actual rates, payments, fees, and qualification depend on your credit profile, the property, the lender, current market conditions, and required taxes & insurance. APR will differ from interest rate. 8Twelve Mortgage is an independent brokerage and arranges — but does not make — loans. Equal Housing Opportunity.

FHA vs. conventional, plainly

FHA almost always beats conventional on qualification. Conventional almost always beats FHA on total long-term cost once you can clear its credit and DTI bars. The win is matching the program to your situation today, with a clear plan to refinance into conventional later once your equity or credit improves.

FHA: easier to qualify, lower rate, life-of-loan mortgage insurance
Conventional: stricter qualification, PMI that drops off near 78% LTV, better long-term economics for stronger files

Mortgage insurance, explained

FHA mortgage insurance has two pieces. The upfront premium (UFMIP) is 1.75% of the loan, almost always financed into the balance. The annual MIP is paid monthly and depends on loan size, LTV, and term — most buyers see roughly 0.55% per year. On modern FHA loans, MIP usually stays the life of the loan.

Property and appraisal standards

FHA appraisers check the home against minimum property standards. They're not inspectors, but they will flag safety issues — chipping paint on older homes, exposed wiring, missing handrails, an unsafe roof. Most are fixable; expect the seller to handle them or for the items to be escrowed at closing.

Waiting periods after a credit event

FHA's seasoning windows after a bankruptcy or foreclosure are shorter than conventional's — typically 2 years from a Chapter 7 discharge and 3 years from a foreclosure, with re-established credit. We'll map your timeline before you apply.

Refinancing out of FHA

Most FHA buyers don't stay in FHA forever. Once you reach roughly 20% equity (through appreciation, principal paydown, or both), a conventional refinance removes mortgage insurance and often improves the rate. It's the move that turns FHA from a long-term cost into a strategic entry point.

Things to weigh

Life-of-loan MIP is real. Build a refinance plan when you set the loan up, not after.
Some condos aren't FHA-approved. We can check before you write the offer.
FHA loan limits vary by area. Higher-cost markets allow larger loans; lower-cost markets cap sooner.
An FHA loan stays attached to you, not the house — selling resets your eligibility for the next purchase.

FAQ

Questions buyers actually ask

What credit score do I need for an FHA loan?+

580 is the practical minimum for 3.5% down. Between 500–579, FHA requires 10% down and many lenders won't go below 580 anyway. We work with FHA-approved lenders across the credit spectrum.

Is FHA only for first-time buyers?+

No. FHA is open to any qualifying borrower buying a primary residence, first-time or not. There are limits on how many FHA loans you can hold at once.

How does FHA mortgage insurance work?+

FHA has two parts: an upfront mortgage insurance premium (UFMIP) of 1.75% added to the loan, plus an annual MIP paid monthly (typically 0.55% of the balance). On most loans originated today, MIP stays for the life of the loan unless you refinance out of FHA.

What are the FHA property requirements?+

FHA appraisers check for health and safety — peeling paint, missing handrails, active roof leaks, etc. The home generally needs to be move-in safe. Major repairs may need to be completed before closing or escrowed.

Can I roll closing costs into the loan?+

Not directly, but you can use seller concessions of up to 6% and lender credits to cover most or all of your closing costs, effectively achieving the same result without inflating the loan.

When can I drop the mortgage insurance?+

On most modern FHA loans, you can't — MIP stays the life of the loan. The standard play is to refinance into a conventional loan once you reach about 20% equity, dropping MIP and often improving the rate at the same time.

See if FHA is your best path.

A 3-minute application. Soft credit pull. A real rate from a broker shopping 50+ lenders for you.

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FHA loans,without the catch.