FHA Loans: The Affordable Loan for Lower-Credit Homebuyers
In this guide, we’ll answer exactly what an FHA loan is, who it’s best for, and situations where an FHA loan makes the most sense for homebuyers.
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What Is An FHA Loan?
- More lenient qualification guidelines, including lower credit score and down payment requirements.
- Slightly lower interest rates than a conventional loan.
- Can be used for primary residences only.
Quick Answer
An FHA loan is ideal for homebuyers who have lower credit scores or do not have the cash on hand for a larger down payment. More lenient qualification guidelines make FHA loans popular among first-time homebuyers.
Why Consider an FHA Loan?
Here's why homebuyers choose to buy with an FHA.
Lower Down Payment Requirements
FHA loans only require a 3.5% down payment for buyers with a credit score of 580 or higher, making it a great option for borrowers who have less savings in the bank.
Lower Credit Score Requirements
Buyers can qualify for an FHA loan with a credit score as low as 580 FICO and a 3.5% down payment. Buyers can also qualify with a credit score between 500-579 FICO if they put at least 10% down.
Closing Costs Rolled Into the Loan
Most FHA loans allow buyers to roll closing costs into the loan, which significantly lowers the financial outlay due at closing.
Helps First-Time Buyers Start Homeownership Journey
The three financial factors above make FHA loans a popular option for first-time homebuyers who might not have the savings or credit to qualify for a conventional loan.
Pro Tip
If you later decide that you prefer the predictability and stability of a fixed interest rate, you can refinance out of your adjustable-rate mortgage and into a fixed-rate option.
FHA Loan Eligibility Requirements in 2025
Credit Score
580, or 500-579 with 10% down payment
Down Payment
3.5% (10% if credit score is less than 580)
Debt-to-Income (DTI)
Less than 43% (Varies by borrower profile)
Mortgage Insurance Premium (MIP)
Required throughout the life of the loan, or required for the first 11 years with 10% down payment.
Property Types Allowed
Primary home
Compare FHA Loans vs. Conventional Loans & Other Options
FHA Loan
30-Year Fixed Conventional
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How to Apply for an FHA Loan
Pre-Qualification (60 Seconds)
Answer a few questions online or with a UMortgage Loan Originator (LO).
Get Custom Loan Options
We’ll show you rates, payment estimates, and closing cost breakdown.
Lock In Your Rate
Choose to lock when you see a competitive rate to avoid surprises later.
Underwriting & Closing
Submit documentation, clear underwriting, and close on your timeline.
Frequently Asked Questions About FHA Loans
Here are answers to the most common questions we get about FHA loans.
Here's Why UMortgage is Your Best Choice
Relationships, Not Transactions
We’re here for more than just your mortgage. We’ll stick with you beyond closing to help you gain financial freedom through homeownership.
Local & Nationwide Expertise
With licensed loan officers across the country and deep knowledge of your local market, we’ll help you buy with confidence anywhere you call home.
Fast, Transparent Closings
We communicate with you every step of the homebuying or refinance process so you can close quickly without any hidden fees or surprises.