In short
FHA loans are insured by the Federal Housing Administration. With a credit score of 580 or higher you can finance up to 96.5% of the home’s value, a 3.5% down payment (HUD Handbook 4000.1). FHA charges an upfront premium of 1.75% of the base loan and an annual premium that is 0.55% on a typical 30-year loan with a small down payment.
What are the basic FHA requirements?
The FHA does not lend money; it insures loans made by approved lenders. HUD’s Handbook 4000.1, updated August 12, 2026, sets the rules:
- Down payment. On a purchase the maximum loan-to-value (LTV) ratio is 96.5% of the “Adjusted Value,” so the borrower’s Minimum Required Investment is at least 3.5%. That requires a Minimum Decision Credit Score of 580 or above.
- Lower scores. A borrower with a score between 500 and 579 is limited to 90% LTV, which means 10% down. Borrowers with no credit history are eligible for maximum financing but must be manually underwritten.
- Occupancy. At least one borrower must move into the home within 60 days of signing the security instrument and intend to stay at least a year.
- Term. The maximum term is 30 years.
- Gift funds. Gifts can come from a family member, an employer or labor union, a close friend with a documented interest in the borrower, a charity, or a government homeownership program. The lender needs a signed gift letter, and cash on hand is not an acceptable source for the donor.
On October 8, 2026, HUD published Mortgagee Letter 2026-11. FHA will accept VantageScore 4.0 and FICO Score 10T as well as classic FICO for case numbers assigned on or after January 1, 2027. See credit score and mortgage rates.
What are the 2026 FHA loan limits?
FHA limits vary by county. HUD announced the 2026 limits on December 11, 2025. They apply to case numbers assigned on or after January 1, 2026.
| Property size | Low-cost area “floor” | High-cost area “ceiling” |
|---|---|---|
| One unit | $541,287 | $1,249,125 |
| Two units | $693,050 | $1,599,375 |
| Three units | $837,700 | $1,933,200 |
| Four units | $1,041,125 | $2,402,625 |
The floor and ceiling are tied to the national conforming loan limit set by the Federal Housing Finance Agency. The ceiling for one unit is 150% of that limit. Alaska, Hawaii, Guam and the U.S. Virgin Islands have separate, higher limits. HUD sets each county’s limit between the floor and ceiling by median home price; find yours in HUD’s county lookup. Compare with conventional loans.
How much does FHA mortgage insurance cost?
Every FHA mortgage carries two premiums.
Upfront premium (UFMIP). The UFMIP is 1.75% of the base loan amount. You can finance all of it into the loan or pay all of it in cash. It is not refundable, except when you refinance into a new FHA loan.
Annual premium (MIP). HUD’s Mortgagee Letter 2023-05 reduced the annual premium for loans endorsed on or after March 20, 2023. Appendix 1.0 of the Handbook (last revised August 12, 2026) shows these rates. A review of HUD’s 2026 Mortgagee Letters and FHA INFO notices found no later change. For terms over 15 years:
| Base loan amount | LTV | Annual MIP | How long |
|---|---|---|---|
| $726,200 or less | 90% or less | 0.50% | 11 years |
| $726,200 or less | Over 90% to 95% | 0.50% | Loan term |
| $726,200 or less | Over 95% | 0.55% | Loan term |
| Over $726,200 | 90% or less | 0.70% | 11 years |
| Over $726,200 | Over 90% to 95% | 0.70% | Loan term |
| Over $726,200 | Over 95% | 0.75% | Loan term |
For terms of 15 years or less, the annual rate on loans of $726,200 or less is 0.15% for 11 years at 90% LTV or below, and 0.40% for the loan term above 90%. A 3.5% down payment is a 96.5% LTV, so the 0.55% row and “loan term” apply: the premium lasts for as long as you have the loan.
A worked example
This is an example, not a quote. Take a $300,000 home with 3.5% down and a 30-year loan.
| Line | Calculation | Amount |
|---|---|---|
| Down payment | 3.5% of $300,000 | $10,500 |
| Base loan amount | $300,000 − $10,500 | $289,500 |
| Upfront premium | 1.75% of $289,500 | $5,066.25 |
| Loan if the UFMIP is financed | $289,500 + $5,066.25, rounded down | $294,566 |
| Annual premium, first year, about | 0.55% of $289,500 | $1,592 (about $133 a month) |
HUD computes the annual premium on the average outstanding balance, so it falls as you pay down the loan. With only 10% down and a score of 500 to 579, the same home would need $30,000 down.
Can the premium be removed?
Look at the “How long” column. If your LTV at the start is 90% or less on a term over 15 years, the annual premium ends after 11 years. Above 90%, it lasts for the loan term. Private mortgage insurance works differently; see private mortgage insurance.
Where states differ
The FHA’s insurance premiums, credit rules and down payment are the same in every state. States differ in what surrounds the loan: transfer taxes, closing costs, whether an attorney closes the sale, and the down payment help that may be paired with an FHA loan. See the Texas and California first-time buyer programs, and closing costs in Texas or in California.
Frequently asked questions
What credit score do I need for an FHA loan?
HUD’s Handbook allows maximum financing, 96.5% LTV, with a Minimum Decision Credit Score of 580 or higher. Between 500 and 579 you are limited to 90% LTV. Lenders may set higher scores of their own.
How much is the FHA down payment?
It is 3.5% of the Adjusted Value with a score of 580 or above, or 10% with a score of 500 to 579. Gift funds can help if they come from an acceptable donor.
Is the FHA loan limit the same everywhere?
No. For 2026 it ranges from $541,287 to $1,249,125 for a one-unit home, depending on the county.
Does FHA mortgage insurance ever go away?
Only in some cases. On a term over 15 years, it ends after 11 years if the starting LTV is 90% or less. Otherwise it lasts for the loan term.
Can I finance the upfront premium?
Yes. The handbook says the UFMIP may be financed into the loan, but it must be financed entirely or paid entirely in cash.
More financing guides
- Mortgage preapproval: what lenders check and how long it lasts
- Conventional loans: requirements and 2026 limits
- VA loans: eligibility and funding fee
- USDA loans: eligible areas, income limits and fees
- How much down payment do you need to buy a home?
- Private mortgage insurance (PMI): how to remove it
- Credit score and mortgage rates: what lenders look at
- Debt-to-income ratio: the limits mortgage lenders use
- How mortgage rates are set: rate, APR, points and locks
- Escrow accounts for taxes and insurance: your rights
- Refinancing a mortgage: costs, break-even and your rights
Sources
- FHA Single Family Housing Policy Handbook 4000.1, Update 18, issued August 12, 2026 (U.S. Department of Housing and Urban Development) (consulted October 13, 2026)
- Mortgagee Letter 2023-05, Reduction in Annual Mortgage Insurance Premiums, February 22, 2023 (U.S. Department of Housing and Urban Development) (consulted October 13, 2026)
- HUD's Federal Housing Administration Announces 2026 Loan Limits, December 11, 2025 (U.S. Department of Housing and Urban Development) (consulted October 13, 2026)
- Mortgagee Letters, 2026 and 2025 listings (U.S. Department of Housing and Urban Development) (consulted October 13, 2026)
- FHA INFO Messages, 2026 (U.S. Department of Housing and Urban Development) (consulted October 13, 2026)