FHA Loans: Low Down Payment Options for Eligible Borrowers

FHA loans are government-backed mortgages insured by the Federal Housing Administration. They offer flexible credit requirements and down payments as low as 3.5% for eligible borrowers, subject to program guidelines.

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What Is an FHA Loan?

An FHA loan is a mortgage insured by the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (HUD). Because the government insures the loan, lenders can offer more flexible credit and down payment requirements than many conventional programs.

FHA loans are not issued by the government directly. They are originated by approved lenders, like American Mortgage Services, and insured by FHA. This insurance protects the lender if the borrower defaults, which is why mortgage insurance premiums are required on all FHA loans.

Who FHA Loans May Fit

FHA loans may be worth comparing if you:

  • Are purchasing your first home and have limited savings for a down payment
  • Have a credit score below 700 but meet minimum FHA requirements
  • Have had a past bankruptcy or foreclosure but have rebuilt your credit over time
  • Are purchasing a modestly priced home within FHA loan limits for your county

FHA loans are for primary residences only. They cannot be used to purchase investment properties or vacation homes.

Down Payment and Credit Requirements

FHA loans offer two down payment tiers based on credit score:

  • Credit score 580 or higher: Minimum down payment of 3.5%
  • Credit score 500 to 579: Minimum down payment of 10%

These are FHA minimums. Individual lenders may apply overlays, meaning they require higher scores or down payments than the FHA floor. Talk with a loan officer about what requirements apply to your scenario.

Mortgage Insurance Premium (MIP)

All FHA loans require mortgage insurance, which protects the lender:

  • Upfront MIP: 1.75% of the loan amount, typically financed into the loan
  • Annual MIP: Paid monthly as part of your mortgage payment. The rate varies based on loan term, loan amount, and LTV ratio

Unlike conventional PMI, FHA MIP on loans with less than 10% down is required for the life of the loan. Borrowers who put 10% or more down can have MIP removed after 11 years.

FHA Loan Limits

FHA loan limits vary by county. For 2026, the national floor is $541,287 for most areas, with a high-cost ceiling of $1,249,125. Your loan amount cannot exceed the FHA limit for the county where the property is located.

Benefits of FHA Loans

  • Lower minimum credit score thresholds than most conventional programs
  • Down payments as low as 3.5% for eligible borrowers
  • More flexible debt-to-income ratio guidelines in some cases
  • Assumable by a qualified buyer when you sell

FHA Loans in Tampa, FL

Tampa and Hillsborough County have a wide range of established neighborhoods with older homes that are well suited to FHA and FHA 203k renovation financing. The 2026 FHA loan limit for Hillsborough County is $541,287 for a single-family home. See the Tampa FHA loan guide for neighborhood context, 203k renovation details, and how FHA financing fits the local market.

Limitations of FHA Loans

  • Mortgage insurance is required for the life of the loan (with less than 10% down)
  • Primary residences only
  • Loan amounts capped at county-specific limits
  • Property must meet FHA minimum property standards
  • Higher total cost over time compared to conventional for borrowers who qualify for both

Frequently Asked Questions

What credit score do I need for an FHA loan?

FHA guidelines allow credit scores as low as 500. Borrowers with scores of 580 or higher may qualify with 3.5% down. Scores between 500 and 579 require at least 10% down. Individual lenders may apply higher minimums. Talk with a loan officer about your specific credit profile.

How much is the down payment on an FHA loan?

The minimum down payment is 3.5% for borrowers with credit scores of 580 or higher. Borrowers with scores between 500 and 579 are required to put down at least 10%. The down payment can come from savings, a family gift, or certain down payment assistance programs.

How long does FHA mortgage insurance last?

For FHA loans with less than 10% down, the annual mortgage insurance premium (MIP) is required for the life of the loan. Borrowers who put 10% or more down can have MIP removed after 11 years. This is one reason some borrowers refinance into a conventional loan once they have 20% equity.

Is an FHA loan a good option after a foreclosure or bankruptcy?

It may be, depending on time elapsed and credit rebuilding. FHA generally requires a 3-year waiting period after foreclosure and 2 years after Chapter 7 bankruptcy discharge. Extenuating circumstances may allow shorter waiting periods in some cases. Individual lenders may apply their own overlays.

How does an FHA loan compare to a conventional loan?

FHA loans generally have lower minimum credit score requirements and allow smaller down payments than conventional loans, but require mortgage insurance for the life of the loan with less than 10% down. Conventional loans allow PMI removal at 20% equity. The better option depends on your credit profile, down payment, and long-term plans.

Compare Your Mortgage Options

Subject to credit, income, property, program, and lender guidelines. Talk with a loan officer about your specific scenario.

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