Built to help people get in the door sooner. This guide breaks down how FHA loans work: minimum down payment, mortgage insurance, credit, and when FHA can be a smart on-ramp toward long-term homeownership.
FHA loans are insured by the Federal Housing Administration and were created to help more people buy homes with smaller down payments and more flexible credit guidelines.
They may be a good fit if you:
FHA may be less ideal if you have strong credit, solid reserves, and 5–10% or more to put down. In those cases, we’ll usually compare Conventional side-by-side to see which is more efficient over the next 5–10 years.
Minimum down payment
Upfront mortgage insurance premium (UFMIP)
Monthly mortgage insurance (MIP)
Big picture: FHA is designed to make getting in the door easier. Part of our planning is thinking through whether FHA is the best starting point and if/when a future refinance to Conventional might make sense.
FHA is often more flexible with lower or rebuilding credit than Conventional. That doesn’t mean “anything goes,” but it does mean past late payments, collections, or shorter credit histories may still be workable with the right structure.
FHA can sometimes allow a higher DTI than Conventional when the rest of your file supports it. Automated underwriting looks at the full picture: income type, credit history, reserves, and more—not just one number in isolation.
The goal isn’t to “push your ratios to the max.” The goal is to find an FHA structure that fits your actual life and budget, even if the guidelines would allow you to stretch further.
FHA loans can be used on a variety of primary residences, including:
FHA is not meant for second homes or pure investment properties. That said, a 2–4 unit property you occupy can still be part of a long-term wealth strategy if the numbers make sense. That’s something we can model out together.
FHA can be powerful when you need flexibility more than perfection:
Conventional may win on long-term cost if your credit and down payment are strong. VA and USDA can be extremely powerful if you’re eligible. The honest conversation is: Which option gets you into the right home with the right risk and the right runway?
When we build your plan, we’ll usually show FHA vs. Conventional (and VA/USDA when applicable) so you’re not choosing based on rules of thumb or something you heard in a short video.
Imagine a buyer with a mid-600s credit score, a solid job, and 3.5–4% saved for a down payment and closing costs. They’ve done the work to get current on debts, but their score isn’t yet where Conventional pricing looks great.
In a case like this, we might compare:
Sometimes FHA is clearly the best “first step,” with a refinance to Conventional later. Other times, a buyer is closer to Conventional-ready than they realize, and a small change in credit or debts tips the scales.
You don’t have to be perfectly organized to start. These items simply help us move faster and give you clear numbers:
Want to rough in numbers before we talk? You can use my mortgage payment calculator to test estimated payments at different price points, taxes, insurance levels, and rate scenarios. It’s for estimates only — we’ll still build your actual FHA plan using live pricing, full guidelines, and your complete application.
The goal is not just “Can you get approved for FHA?” It’s: Does this FHA plan move you toward the bigger picture for your family and finances?
As you look at FHA numbers, these questions help cut through the noise:
If you can answer those clearly, you’re already ahead of most buyers in understanding how FHA fits into your long-term plan.