FHA Home Loan Requirements

The Department of Housing and Urban Development (HUD) oversees the FHA Mortgage Insurance Program. The federal government instituted this program during the Great Depression to make home ownership accessible to millions of Americans.


Approved lenders are the source for FHA mortgages. Should the loan go into default, the government promises to repay the balance.


FHA loans generally have lower interest rates than conventional mortgages and allow lower down payments ranging from 3 percent to 5 percent.


The credit guidelines for an FHA mortgage are less strict than other financing, allowing lower FICO scores and a less-than-perfect credit history.

Down Payment

It is permissible to get your down payment from gifts, relatives or places other than your personal savings. Traditional mortgages insist on the down payment originating from your own resources.


Section 203 of the FHA rules allows mortgages and improvement dollars to rehabilitate a property. It also allows for interest-deferred payments while the property is under construction. These programs are not offered in all areas.


FHA recommends the housing expense does not exceed 29 percent and your total debts should be 41 percent, or less, of your total income. In addition, housing prices are capped on FHA loans by region. For example, in San Francisco, the cap is $362,700 and in Springfield, Missouri, loans are capped at $200,160.


There are many loans types offered by the FHA, depending on your needs. Additionally, some guidelines vary by region. For more information in your area, contact an approved FHA lender or consult the FHA website.