How to Apply for an FHA Loan: 2024 Process & Requirements

By: Valencia Higuera Updated By: Ryan Tronier Reviewed By: Paul Centopani
February 28, 2024 - 17 min read

How to get an FHA loan

When you apply for an FHA loan, you’ll discover it’s a fantastic option for buying a house without a hefty down payment or flawless credit score.

Almost every private lender offers these government-backed mortgages. This availability means you can effortlessly apply and seek the most competitive rates.

Whether you prefer beginning your application online or meeting face-to-face with a loan officer for tailored advice, the choice is yours, ensuring a tailored mortgage experience.

Begin your FHA loan application process. Start here

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What is an FHA loan?

The FHA loan is a popular mortgage program backed by the Federal Housing Administration. It caters especially to those who might find it challenging to qualify for a traditional mortgage by offering lenient credit requirements and a low down payment.

While the FHA doesn’t directly lend money to borrowers, it insures the loans made by private lenders, thereby reducing the risk for the lender and allowing them to provide more favorable terms. This helps ensure that a wider range of people can become homeowners, filling in the gaps in the real estate market.

Whether you’re a first-time home buyer or someone looking for a more flexible lending option, the FHA loan might be the solution for you.

How to apply for an FHA loan

If you’re wondering how to apply for an FHA loan, here’s the lowdown. Although the Federal Housing Administration, a division of the Department of Housing and Urban Development (HUD), insures these loans, private lenders actually issue them.

Compare FHA loans from multiple lenders. Start here

This government backing allows FHA loans to come with perks like lower down payments, forgiving credit requirements, and competitive rates, making homeownership more accessible to many.

Even though the FHA guarantees this loan program, they don’t provide the funds. That’s where your chosen private lender comes in. Your first step? Picking that lender to start your FHA journey.

1. Find an FHA lender

The first step in applying for a FHA loan is to find a participating lender. Fortunately, most banks, mortgage companies, credit unions, and online lenders are equipped to provide FHA financing. The ideal lender for you will depend on several factors, including your credit score and your preferred method of communication. For example:

  • Credit score considerations: Verify that your lender accepts the FHA’s minimum score of 580, though some may require a higher score.
  • Communication preferences: If you value face-to-face or phone interactions, a local lender might be your best bet. Alternatively, many lenders offer a streamlined online mortgage process for those who prefer digital communication.

2. Apply for an FHA Loan

After choosing your lender, the next step is the loan application. This process can often be completed online, though some lenders may offer or require phone or email communication with a loan officer.

It’s wise to shop around; mortgage terms and rates can vary significantly. Contacting multiple lenders to compare offers ensures you secure the best possible deal. Aim to get quotes from at least three to five lenders to ensure comprehensive market insight.

Concerned about your credit score? Submit all loan applications within a 45-day period to minimize the impact, as they will count as a single inquiry.

3. Provide basic details and documentation

Your lender will need certain information to start the application process, including:

  • Full name and Social Security Number
  • Valid driver’s license or state-approved ID
  • Income and employment history
  • Property details, including address and purchase price
  • Down payment amount

Once you’ve provided this basic information, the lender will request supporting financial documents to verify your income, savings, and debts. You can see a list of supporting documents you’ll be asked for below.

Compare FHA loans from multiple lenders. Start here

4. Compare Loan Estimates

After you submit a loan application, the lender must provide a Loan Estimate within three business days.

The Loan Estimate (LE) is a standard form all lenders use. It’s designed to keep the loan process transparent by providing information about a borrower’s estimated interest rate, monthly mortgage payments, and closing costs upfront.

The LE also provides information about the loan type and term, so you know you’re comparing mortgage offers on equal footing. (For instance, an FHA loan with a 15-year term would have much higher payments than one with the same loan amount and a 30-year term.)

Make sure all your loan offers quote the same loan type, loan term, and loan amount. Then compare interest rates, annual percentage rates (APR), and upfront fees to find the best deal.

5. Undergoing the FHA appraisal

Once your loan application is in progress, your lender will arrange for an FHA-approved appraiser to evaluate the property you intend to purchase. This step is crucial as it ensures the property meets the FHA’s minimum property standards and determines its market value.

The appraisal assesses the home’s condition, including safety, security, and structural integrity. Preparing for this step involves understanding that the property must qualify under FHA guidelines just as much as the borrower does. We go over FHA loan property requirements in more detail below.

6. Loan processing and underwriting

After the appraisal, your loan enters the processing stage where the lender verifies all the information provided in your FHA loan application, including your income, credit history, and the property details.

Following processing, your loan moves to underwriting. During underwriting, an FHA-approved underwriter reviews your application to make a final decision on your loan approval. This stage may require you to provide additional documentation or clarification, so staying responsive and prepared to supply any requested information quickly is important.

7. Closing on your FHA loan

The final step in the FHA loan application process is the closing. Once your loan is approved, you’ll receive a closing disclosure outlining the terms of your loan, closing costs, and any other fees associated with your mortgage.

Review this closing document carefully. You’ll then attend the closing meeting to sign the loan documents, finalize the mortgage, and take ownership of your new home.

Preparing for closing involves ensuring you have the necessary funds for your down payment and closing costs and understanding the legal implications of your mortgage documents.

8. Maintaining your FHA Loan

After closing, it’s important to maintain good financial habits to ensure you remain in good standing on your FHA loan. This includes making timely mortgage payments, keeping up with property taxes and homeowner’s insurance, and maintaining your home in good condition.

Consider setting up automatic payments to avoid missing a mortgage payment, and regularly review your loan statements to stay informed about your loan balance and interest payments.

Documents needed to apply for an FHA loan

When you initially apply for an FHA loan, lenders will ask about your income, savings, debts, and assets.

Once you decide to proceed with the loan, they’ll need proof of the information you provided. That means submitting a variety of financial documents.

Begin your FHA loan application process. Start here

You’ll typically be asked to provide the following:

  • Tax returns from the past two years
  • W2s from the past two years
  • Bank statements from the previous 60 days
  • Financial statements for other assets (investment accounts and retirement accounts)
  • Recent pay stubs
  • Proof of other income, such as Social Security or disability income
  • Name and address of your employers over the previous two years
  • Year-to-date Profit and Loss statement, if you’re self-employed

The lender will also pull your credit score and credit reports. Authorizing a credit check allows the lender to view your credit history and verify your current debt load and minimum monthly payments.

FHA loan requirements

Applying for an FHA loan is fairly straightforward, but ensuring successful approval requires understanding and meeting specific criteria. The FHA loan program is designed to help more people become homeowners by allowing lower credit scores and smaller down payments than many conventional loans.

Compare FHA loans from multiple lenders. Start here

Below, we provide detailed insights into key FHA loan requirements, helping you navigate the application process with confidence.

FHA borrower requirements

Credit score

FHA home loans are accessible to a wider range of borrowers due to their flexible credit score requirements. Specifically, you need a minimum FICO score of 500 to qualify. However, to take advantage of the lower 3.5% down payment option, a FICO score of 580 or higher is required.

This is significantly more accommodating compared to conventional mortgages, which typically require a FICO score of at least 620.

Remember, the better your credit score, the more favorable your loan terms will be.

Credit history

Your credit history plays a crucial role in the FHA loan approval process.

  • Generally, FHA lenders allow no more than a single 30-day late payment in the past 12 months.
  • Additionally, applicants should not have undergone foreclosure in the last three years or filed for bankruptcy recently.

These guidelines are in place to ensure that borrowers have a track record of managing their financial obligations responsibly.

Down payment

One of the most appealing aspects of FHA loans is their low down payment requirement.

  • If your credit score is 580 or above, you’re eligible for a minimum down payment of just 3.5%.
  • For applicants with credit scores between 500 and 579, a 10% down payment is required.

For individuals without substantial savings, this flexibility makes the home-buying process easier.

Loan-to-value ratio (LTV)

The loan-to-value ratio (LTV) is a critical factor in determining your eligibility for an FHA loan. It compares the loan amount you are seeking with the home’s market value. Lenders use LTV to evaluate the risk associated with the loan.

Your LTV must be 96.5% or lower to qualify for FHA loan approval, which means you need to make a down payment of at least 3.5%.

Closing costs

In addition to the down payment, borrowers are responsible for closing costs. FHA loan lenders and third parties involved in the transaction, like title companies or HOAs, charge these fees for loan origination, underwriting, and more.

Closing costs vary by lender but typically range from 2% to 5% of the loan amount. It’s important to budget for these closing costs upfront, as they are separate from the down payment.

Debt-to-income ratio (DTI)

The debt-to-income ratio (DTI) is another key consideration for FHA loan approval. This ratio measures the portion of your gross monthly income that goes towards paying off debts, such as credit card payments and student loans.

  • For an FHA loan, your DTI should generally not exceed 45%.
  • However, lenders may allow a higher DTI if you have compensating factors like an excellent credit score or substantial cash reserves.

Moreover, up to 31% of your gross monthly income can be allocated towards your house payment.

By understanding and meeting these FHA loan requirements, you can improve your chances of approval. Remember, each lender may have additional criteria, so it’s beneficial to shop around and compare offers to find the best deal for your situation.

FHA loan property requirements

When applying for an FHA loan, not only do borrower qualifications matter, but the property itself must meet specific standards set by the Federal Housing Administration. These requirements ensure that the property is a safe, secure, and sound investment for the borrower.

Below, we detail the key property requirements that must be satisfied for FHA loan approval.

Property appraisal

An FHA-approved appraiser must conduct a thorough appraisal to assess the value of the property. This appraisal ensures the home meets HUD’s minimum property standards and determines the property’s market value. The appraisal evaluates the physical condition of the home, any necessary repairs, and compliance with local building codes.

Primary residence

The FHA loan program is designed for properties that will be used as the borrower’s primary residence. Investment properties or vacation homes do not qualify. The borrower must intend to occupy the property within 60 days of closing and continue to live there for the majority of the year.

Single-family homes

Single-family homes are the most straightforward property type for FHA financing. These properties must meet all FHA property requirements, including safety, health standards, and structural integrity.

Multi-unit homes

FHA loans can also be used to purchase multi-unit homes, such as duplexes or fourplexes, under certain conditions. The borrower must live in one of the units as their primary residence. The other units can be rented out, which can be an attractive option for borrowers looking to generate rental income.

Like single-family homes, multi-unit properties must pass the FHA appraisal process and meet all health and safety standards.

Second homes and investment property

Second homes do not qualify for FHA loans. The FHA loan program is specifically designed to help borrowers purchase their primary residence. Financing a vacation home or a property that the borrower intends to use as a secondary residence does not meet the program’s eligibility requirements.

Investment properties are also ineligible for FHA loans. The program does not support the purchase of properties that the borrower intends to use solely for rental income and does not plan to occupy as their primary residence.

Safety and health standards

The property must provide a safe and healthy living environment for its occupants. This includes functioning heating, electrical, and plumbing systems. The property should be free of significant physical deficiencies, lead-based paint hazards, toxic substances, and other conditions that could pose a risk to the occupants’ health or safety.

The property must have sound structural integrity. This means the foundation, roof, walls, floors, and other structural components must be in good condition and free of significant damage. Properties that require extensive repairs for structural issues may not qualify until repairs are made.

Access and egress

There must be proper access to the property for pedestrians and vehicles, and the property must have a safe, accessible egress in case of emergencies. This includes appropriate access from the public or private streets and the presence of emergency exits.

Adequate living space

The home must provide adequate living space for the borrower. This includes suitable sleeping areas, a functioning bathroom, and kitchen facilities. The property must be able to accommodate basic living, cooking, and sleeping functions.

Utility services

The property must have independent utility services for water, sewage, electricity, and, if applicable, gas. These services must be safely and adequately installed and operational. When there are no public utilities available to serve the property, there must be proof of adequate and trustworthy alternative sources.

Meeting these property requirements is key for FHA loan approval. Properties that do not meet these standards may require repairs before proceeding with the FHA loan process. Borrowers should work closely with their lender and real estate agent to ensure the property they are interested in can qualify for FHA financing.

FHA mortgage insurance

All lenders charge FHA mortgage insurance for the life of the loan. In other words, you must pay FHA mortgage insurance until the principal loan balance is paid or you refinance to another type of mortgage, like a conventional loan.

FHA mortgage insurance is designed to protect lenders against losses if a borrower defaults on their mortgage. There are two types of FHA mortgage insurance premiums that borrowers must pay: the Upfront Mortgage Insurance Premium and the Annual Mortgage Insurance Premium, which is paid monthly.

Upfront Mortgage Insurance Premium (UFMIP)

UFMIP is a one-time fee paid at closing and is typically 1.75% of the loan amount. For example, on a $300,000 loan, the UFMIP would be $5,250. This amount can be financed into the mortgage, allowing borrowers to pay it off over the life of the loan rather than upfront.

Annual Mortgage Insurance Premium (MIP)

The annual MIP is paid monthly and varies based on the loan term, loan amount, and initial loan-to-value ratio (LTV). Rates can range from 0.45% to 1.05% of the loan amount per year.

For a 30-year fixed-rate loan of $300,000 and an LTV greater than 95%, the MIP rate might be 0.85%, or $2,125 per year. This equates to an additional $177.08 that is added on top of your monthly mortgage payments.

FHA loan limits

FHA loan limits are the maximum amount that you can borrow under an FHA loan program, and these limits vary by county and are adjusted annually to reflect changes in home prices.

Current FHA loan limits are $ in most areas but reach upwards of $ in high-cost housing markets.

Verify your FHA loan eligibility. Start here

These limits are set to ensure that FHA loans are used for moderate-priced homes and to help maintain the program’s mission of serving low-to-moderate-income borrowers.

FHA loan limit example for a metro area

In a high-cost metro area like San Francisco, California, FHA loan limits can be significantly higher to accommodate the area’s elevated home prices.

For 2024, the FHA loan limit for a single-family home in San Francisco County is $. This adjustment allows borrowers in high-cost areas to access FHA financing for homes priced above the national average.

FHA loan limit example for a suburban area

Conversely, in a suburban area with more moderate housing costs, such as Harris County in Houston, Texas, the FHA loan limit for a single-family home might be lower, reflecting the area’s average home prices.

For instance, the FHA loan limit is $ in 2024. This ensures that the FHA loan program serves its purpose of helping families afford homes without encouraging excessive borrowing.

How long does it take to apply for an FHA loan?

The typical timeline from application to closing with an FHA loan ranges from 30 to 45 days.

During this time, your loan file goes through underwriting. The underwriter takes a closer look at your application and reviews supporting documents to ensure you meet the minimum guidelines for FHA financing.

Here are the items you can expect the underwriter to review:

  • Current minimum debt payments, then calculate your debt-to-income ratio
  • Bank statements and other assets to confirm that you have enough reserves for the down payment and closing costs. If your down payment is coming from a cash gift or down payment assistance, you’ll need documents verifying the source(s) of the funds
  • Previous tax returns and W2s statements to confirm a two-year history of stable, consistent income
  • Recent pay stubs to verify you’re still employed and earning income
  • Schedule an appraisal to determine the home’s current market value

Home inspection

You should also schedule a home inspection after getting a purchase agreement. A home inspection isn’t required for loan approval, but it’s recommended because it can reveal hidden issues with the property.

“This is more important with FHA prior to paying for the appraisal, if possible, as appraisers have stricter guidelines for FHA, and your home may not even be eligible for FHA if there are specific issues,” says Jon Meyer, loan expert and licensed MLO.

If your offer was subject to a satisfactory home inspection, you can ask the seller to correct these issues before closing.


During the underwriting process, your lender might request additional information. Don’t panic—this is common when applying to any mortgage loan program.

For example, if your parents gift your down payment and closing costs, your lender will request a gift letter. Or if you receive alimony payments, the lender might ask to see a copy of your divorce decree.

Submit the requested information as soon as possible to keep closing on schedule.

Where can I apply for an FHA loan?

The FHA doesn’t offer loans directly, so you’ll need to contact a private lender to apply.

The majority of lenders are FHA-approved, so you’re free to choose a local lender, big bank, online mortgage lender, or credit union.

Begin your FHA loan application process. Start here

To find a suitable FHA lender, you can get recommendations from friends or family who’ve used an FHA loan. You can also check with the Better Business Bureau to review a bank or mortgage lender’s rating and read online reviews.

Keep in mind that credit requirements for FHA loans vary between lenders. While many allow a credit score as low as 580, some might set their minimum at 600 or even higher. If your score is on the lower end of qualifying for an FHA loan, you might need to shop around a little more.

Regardless of your credit score, you should find at least three lenders and apply to them.

FHA mortgage rates can vary a lot from lender to lender, and you won’t know which one can offer you the best deal until you’ve obtained personalized quotes.

Pros and cons of FHA loans

FHA loans come with a mix of advantages and disadvantages, making them suitable for some borrowers but not for others. Here’s a breakdown:

Pros of FHA loans

  • Lower down payments: One of the biggest draws of FHA loans is the ability to put down as little as 3.5% if your credit score is 580 or higher
  • Lenient credit requirements: Borrowers with lower credit scores can qualify. Those with scores as low as 500–579 might qualify for a 10% down payment
  • Higher debt-to-income ratios: FHA loans can be more forgiving of higher debt levels compared to some other loan types
  • Assumable loans: Under certain conditions, an FHA loan can be assumed by a buyer when a home is sold, potentially benefiting from a lower interest rate

Cons of FHA Loans:

  • Mortgage insurance: Borrowers must pay both an upfront mortgage insurance premium (UFMIP) and an ongoing annual premium (often for the life of the loan), which can make the loan more expensive over time
  • Loan limits: FHA loans have limits that vary by county, which might restrict the purchasing power of the borrower in high-cost areas
  • Property restrictions: Homes purchased with an FHA loan must meet certain safety, security, and structural integrity standards. This might limit the type or condition of homes you can buy
  • Higher interest rates: While not always the case, FHA loans can sometimes have slightly higher interest rates than conventional loans
  • Occupancy requirement: FHA loans require the borrower to use the purchased property as their primary residence, making it unsuitable for investment properties

Deciding whether an FHA loan is right for you will depend on your individual financial situation and home buying goals.

Looking ahead: Refinancing an FHA loan

Looking down the homeownership path, many wonder about the benefits of refinancing their FHA mortgages and whether it’s a suitable choice for them.

The reasons to consider refinancing are numerous, ranging from acquiring a more favorable interest rate to shedding long-term costs. Homeowners certainly have several options when they decide to refinance an existing FHA loan.

Streamline Refinance

Specifically designed for those with an existing FHA loan, a Streamline Refinance provides an efficient route to obtain a lower rate and consequently reduce monthly mortgage payments.

Its advantage lies in its simplicity—the process is faster than a conventional refinance and often requires less documentation, enabling homeowners to capitalize on current market rates with minimal hurdles.

FHA cash-out refinance

An FHA cash-out refinance allows homeowners to access their home’s built-up equity by taking out a new, larger loan and receiving the difference in cash. This method is ideal for those who’ve accumulated significant equity and wish to utilize it for various needs or projects.

Refinancing to a conventional loan

This option is particularly attractive to those wanting to eliminate the annual mortgage insurance premium (MIP) that’s mandated for the duration of most FHA loans. By transitioning to a conventional loan, homeowners can potentially save thousands over the life of the loan.

However, to qualify, one needs to meet specific criteria, like a minimum credit score requirement, and possess at least 20% home equity.

Whatever the motivation, understanding the available FHA refinancing options is essential to making informed financial decisions that enhance long-term homeownership stability and success.

FAQ: How to apply for an FHA loan

Begin your FHA loan application process. Start here

What is the first step to getting an FHA loan?

To apply for an FHA loan, the initial step involves finding an FHA-approved lender and getting pre-approved for your mortgage amount based on your financial situation.

How long does it take to get an FHA loan?

After you apply for an FHA loan, the approval process can vary in duration but typically takes between 30 and 45 days, depending on the completeness of your documentation and the lender’s backlog.

What is the minimum score for an FHA loan?

The minimum credit score required to qualify for an FHA loan largely depends on the lender, but most require a score of at least 580.

Which is better, FHA or conventional?

Deciding between an FHA and a conventional loan depends on individual circumstances. For first-time home buyers, an FHA might be preferable due to its lower down payment requirements. However, conventional loans might be more suitable for those with higher credit scores since they can potentially avoid the upfront mortgage insurance premium associated with FHA loans.

Are mortgage payments higher with an FHA loan?

Often, FHA loans come with competitive interest rates, but the inclusion of an upfront mortgage insurance premium (UMIP) and ongoing premiums (MIP) can lead to slightly higher mortgage payments compared to some conventional rate loan options.

Are you ready to apply for an FHA loan?

Applying for an FHA loan is pretty straightforward. Once you’ve chosen the lenders to apply with, their online systems and loan officers will walk you through the process step by step.

Make sure you have all your financial documents on hand to make the application process go as smoothly as possible.

Most importantly, apply with more than one FHA lender. This is the only way to ensure you get the most competitive rate. Remember, even a seemingly tiny rate difference (0.125% or less) can cost you thousands of dollars over the life of the loan.

Luckily, many lenders offer online preapproval. So getting mortgage quotes and comparing rates can be relatively quick and painless.

Time to make a move? Let us find the right mortgage for you

Valencia Higuera
Authored By: Valencia Higuera
The Mortgage Reports contributor
Valencia Higuera is a freelance writer from Chesapeake, Virginia. As a personal finance and health junkie, she enjoys all things related to budgeting, saving money, fitness, and healthy living.
Ryan Tronier
Updated By: Ryan Tronier
The Mortgage Reports Editor
Ryan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Paul Centopani
Reviewed By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.