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FHA Loans
Government-backed financing with low down payments and flexible credit guidelines. One of the most popular programs in the country—especially for first-time homebuyers.
Who Is This Loan For?
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✅ First-time homebuyers
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✅ Buyers with credit scores as low as 580
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✅ Buyers with limited savings for a down payment
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✅ Buyers with higher debt-to-income ratios
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✅ Anyone who wants flexible qualification guidelines
What Is an FHA Loan?
An FHA loan is a mortgage insured by the Federal Housing Administration. The FHA doesn't lend money directly—it insures the loan, which reduces the lender's risk. This government backing is why FHA loans can accept lower credit scores, smaller down payments, and higher DTI ratios than conventional loans.
The tradeoff? Mortgage insurance (MIP)—which you'll pay for the life of the loan if you put less than 10% down. But for many buyers, the lower barrier to entry makes FHA the smartest path to homeownership.
At Team Malik, we've helped hundreds of first-time buyers get into their homes through FHA. We use AI-powered technology approved by Fannie Mae and Freddie Mac to make the process fast, clear, and stress-free.
FHA Loan Requirements
Credit Score
580 minimum for the standard 3.5% down payment. Scores between 500–579 can still qualify with 10% down. Most of our FHA borrowers are in the 600–680 range.
Down Payment
3.5% with a 580+ credit score. Here's the best part: 100% of the down payment can come from a gift—family, employer, or an approved down payment assistance program. This is one of FHA's biggest advantages.
Debt-to-Income Ratio (DTI)
FHA allows DTI ratios up to 50% in some cases, though 43% is the standard guideline. This higher allowance helps buyers in expensive markets or those carrying student loan debt.
Employment
Two years of employment history. Gaps need to be explained but don't automatically disqualify you.
Property Requirements
The home must be your primary residence (no investment properties). It must pass an FHA appraisal, which checks for health and safety issues in addition to value—slightly stricter than a conventional appraisal.
FHA Mortgage Insurance Premium (MIP)
FHA loans require two types of mortgage insurance:
Upfront MIP:
1.75% of the loan amount, typically rolled into the loan. On a $300,000 loan, that's $5,250 added to your balance.
Annual MIP:
Paid monthly. For most borrowers with a 30-year term and less than 5% down, the rate is 0.55%. On a $300,000 loan, that's roughly $137/month.
How long does MIP last?
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Less than 10% down: MIP lasts the life of the loan
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10% or more down: MIP is automatically removed after 11 years
The exit strategy: Many of our clients start with FHA, build equity over a few years, then refinance into a conventional loan to eliminate MIP entirely. We'll help you plan for that from day one.
FHA Loan Limits (2026)
FHA loan limits vary by county and are updated annually:
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Floor (most areas): $541,287 for a single-family home
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Ceiling (high-cost areas): $1,249,125
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Multi-unit properties have higher limits
Most counties in New Jersey, Florida, and Pennsylvania fall at or near the floor. Some South Florida and North Jersey counties have higher limits due to elevated home prices.
FHA vs. Conventional: Quick Comparison
FHA is the better choice when your credit is below 680 or you have minimal savings. Once your credit improves and you build equity, refinancing into a conventional loan to drop MIP is a smart long-term strategy.
The FHA Loan Process
Step 1 — Pre-Approval
We review your financial profile and determine your FHA eligibility. You'll receive a pre-approval letter within 1–2 business days.
Step 2 — Home Search
Find a home that will be your primary residence. Keep in mind the FHA appraisal checks for health and safety issues—major peeling paint, missing handrails, or faulty wiring may need to be fixed before closing.
Step 3 — FHA Appraisal
An FHA-approved appraiser determines the home's value AND confirms it meets minimum property standards. This is slightly more involved than a conventional appraisal.
Step 4 — Underwriting
FHA underwriting follows HUD guidelines. We handle the process—typical timeline is 2–3 weeks.
Step 5 — Closing
Sign your paperwork, pay closing costs (2–5% of the loan amount), and get the keys. The upfront MIP is typically rolled into the loan. Total timeline: 30–45 days.
Frequently Asked Questions
What credit score do I need for an FHA loan?
580 is the standard minimum for 3.5% down. Scores between 500–579 can qualify with 10% down. Most of our FHA borrowers are in the 600–680 range.
Can I use an FHA loan for an investment property?
No. FHA loans are strictly for primary residences. For investment properties, check out our DSCR Loan program—no personal income verification required.
Can I buy a multi-unit property with FHA?
Yes! FHA allows you to purchase 2–4 unit properties as long as you live in one unit as your primary residence. Rental income from the other units can help you qualify—a strategy called "house hacking."
How do I get rid of FHA mortgage insurance?
If you put less than 10% down, the only way to remove MIP is to refinance into a conventional loan once you have 20% equity and a 620+ credit score. If you put 10%+ down, MIP drops off after 11 years.
Can my entire down payment be a gift?
Yes—FHA allows 100% of the down payment to come from family, employers, or approved assistance programs. This is one of FHA's biggest advantages for first-time buyers.
Can I get an FHA loan after bankruptcy?
Yes. Two years after a Chapter 7 discharge, or one year into a Chapter 13 repayment plan (with court approval). Foreclosure requires a three-year waiting period—shorter than conventional.
Can I refinance an FHA loan?
Yes. The FHA Streamline refinance lets you lower your rate with minimal documentation and no appraisal in most cases. You can also refinance into a conventional loan to eliminate MIP.
Explore Other Loan Options
FHA Loans → Low down payment and flexible credit. Great for first-time buyers.
DSCR Loans → Qualify on rental income. Built for investors.
Bank Statement Loans → Self-employed? Use your deposits to qualify.