An FHA loan is a government-backed mortgage insured by the Federal Housing Administration. Because the government is insuring the lender against loss if you default, lenders are willing to offer FHA loans to homebuyers with lower credit scores and smaller down payments than conventional loans allow.
Minimum Credit Score and Down Payment
The primary draw of an FHA loan is its lenient credit requirements. In 2026, the requirements are:
- 580 or higher FICO score: You qualify for maximum financing and only need a 3.5% down payment.
- 500 to 579 FICO score: You can still qualify for an FHA loan, but you will be required to put down at least 10%.
FHA vs. Conventional Loans
While conventional loans typically require a minimum credit score of 620, FHA loans are much more accessible. However, this accessibility comes with a cost: Mortgage Insurance Premiums (MIP).
Unlike Private Mortgage Insurance (PMI) on a conventional loan which can be canceled once you reach 20% equity, FHA MIP is often required for the entire life of the loan (if your down payment was less than 10%). Additionally, FHA loans require both an Upfront MIP (typically 1.75% of the loan amount, rolled into the loan) and an Annual MIP (paid monthly).
Want to see exactly what your monthly payments and Upfront MIP will look like? Try our dedicated FHA Calculator to run your numbers.
Property Requirements
FHA loans cannot be used to buy investment properties or house flips. The home you purchase must be your primary residence. Furthermore, the property must pass a strict FHA appraisal to ensure it meets minimum safety and livability standards.