FHA Loans 2026: Down Payments as Low as 3.5% for Qualified Borrowers

Illustrative scenarios for educational purposes only. Not a quote, lock, offer, or commitment to lend. FHA Annual MIP rates; UFMIP is 1.75% of the base loan amount and is typically financed. Conventional PMI rates vary by mortgage insurer, credit score, and LTV. Property taxes and homeowner's insurance vary by location and carrier. Binding figures appear on your Loan Estimate after a complete application. Simply Approved Mortgages LLC, NMLS# 2620881. Equal Housing Opportunity.

Next steps

Emailing your FHA payment and limit calculators scenario opens our secure request form so a Simply Approved Mortgages Loan Officer can review those numbers. Estimates are illustrative and are not a quote, lock, offer, or commitment to lend.

Down payment assistance

Stack a grant on top of your loan — and close with thousands less

DPA programs are grants, forgivable second mortgages, or deferred loans that cover some (or all) of your down payment and closing costs. They stack on FHA, VA, USDA, HomeReady, and Home Possible. Income and area limits apply.

Why down payment assistance matters

How DPA helps, why it can help, and why American buyers use it

The single biggest obstacle for most first-time and moderate-income buyers is not credit or income — it is the cash needed to close. Down Payment Assistance (DPA) programs are designed to bridge that gap so qualified buyers can stop renting and start building equity sooner.

How DPA helps

DPA delivers funds — as a grant, forgivable loan, deferred second mortgage, or repayable second lien — that can be applied to your down payment, closing costs, or prepaid escrows. That means less cash out of pocket at closing and, in many cases, the ability to keep savings intact for reserves, moving expenses, and emergencies.

Why it can help you

The CFPB and HUD both confirm that thousands of federal, state, county, and city DPA programs exist. Many buyers assume they will not qualify — but most DPA programs allow moderate incomes, non-first-time buyers, or workforce occupations like teachers, nurses, and first responders. Layering DPA on an FHA, VA, USDA, or Conventional loan is one of the fastest ways to shorten the "how long until I can buy" timeline.

Why Americans should use it

The Federal Reserve's Survey of Consumer Finances shows homeowners typically hold far more household wealth than renters at comparable income levels. DPA does not lower the price of a home — it lowers the barrier to entry so more American families can start building that equity sooner, using government-backed programs paid for with public and philanthropic funds already set aside for that purpose. Unused DPA dollars simply return to the program pool at year end.

Educational information only. DPA eligibility, funding availability, income limits, purchase-price caps, occupancy rules, and repayment terms vary by program and change without notice — always confirm details directly with the program administrator. Simply Approved Mortgages is not affiliated with, endorsed by, or sponsored by HUD, FHA, VA, USDA, FHFA, the CFPB, or any state Housing Finance Agency. All loans subject to credit approval and underwriting. Equal Housing Opportunity. NMLS# 2620881.

National & federal

Verify any DPA program on these official sources

State Housing Finance Agencies

Top-volume state DPA programs

California

CalHFA

Texas

TSAHC / TDHCA

Florida

Florida Housing

New York

SONYMA

Arizona

Arizona IDA — Home Plus

Colorado

CHFA

Georgia

Georgia Dream

North Carolina

NCHFA

Illinois

IHDA

Pennsylvania

PHFA

Ohio

OHFA

Nevada

Home Is Possible

Start My Approval →See Today's Rates →

Don't see your state? Every state has at least one Housing Finance Agency — find yours through NCSHA's directory.

Simply Approved Mortgages DPA

Simply Approved Mortgages DPA — no income cap, no first-time buyer requirement

For FHA purchase borrowers, Simply Approved Mortgages offers a repayable 10-year fixed second lien covering 3.5% or 5% of the lesser of the purchase price or appraised value. Minimum 600 credit score, primary residence only. The second-lien rate is 2% higher than the first mortgage and can be used for down payment, closing costs, or prepaids.

Start My Approval →

Not available in NY, WA, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa. Program subject to investor and FHA underwriting guidelines; not a grant. The second lien is repayable over 10 years and generally may not be resubordinated for 3–10 years depending on the assistance amount. Final eligibility and terms are determined only after a full application and underwriting review.

Simply Approved Mortgages DPA

DPA amount calculator & eligibility checker

Estimate your Simply Approved Mortgages Down Payment Assistance at 3.5% or 5% of the lesser of purchase price or appraised value, and see the 10-year repayable second-lien structure layered on top of a 30-year fixed FHA first mortgage. Then check whether you meet the core program rules.

Amount calculator

Purchase priceAppraised value

Assistance tier (% of lesser of price or appraisal)

Illustrative 1st-mortgage interest rate (%)Used only to show the 2nd-lien rate (1st rate + 2%). Not a quote.

Lesser of price or appraisal: $400,000
Estimated DPA at 3.5%: $14,000
2nd-lien term: 10-year fixed, repayable
2nd-lien rate (illustrative): 8.500% (1st rate + 2%)
Estimated 2nd-lien monthly P&I: $174/mo

Illustrative only — not a quote, lock, offer, or commitment to lend. Actual assistance, rate, and payment depend on the final loan amount, your credit profile, appraisal, and program guidelines in effect at closing. Binding figures appear only on your Loan Estimate and Closing Disclosure.

Eligibility checker

Your approximate credit score600+ lowest middle score required (620 on manufactured homes). No-credit and non-traditional credit files are not eligible.How will you occupy the property?Property type

Do you have documentable, qualifying income (W-2, self-employment, retirement, etc.)?

Are you willing to complete an approved homebuyer education course before closing?

Is the property located in NY, WA, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, or American Samoa?

Answer each question above to see your preliminary eligibility result.

This is a preliminary self-check, not an underwriting decision or a credit decision. It does not pull your credit and is not a quote, lock, offer, or commitment to lend. Program rules, fees, costs, terms, and conditions are subject to change without notice. Simply Approved Mortgages is not affiliated with HUD, FHA, the VA, USDA, FHFA, CHFA, FHFC, metroDPA, or any government agency. Equal Housing Opportunity. NMLS# 2620881.

Next steps

Emailing your Down payment assistance calculator scenario opens our secure request form so a Simply Approved Mortgages Loan Officer can review those numbers. Estimates are illustrative and are not a quote, lock, offer, or commitment to lend.

Not sure which DPA fits you?

We confirm DPA eligibility at pre-approval — free, no commitment

Tell us your zip code and income; we'll match you to every grant and second-mortgage DPA you qualify for and build the stack on your Loan Estimate.

Start My Approval →

DPA programs are administered by federal, state, and local agencies — terms, income limits, and funding availability change frequently and without notice. Simply Approved Mortgages is not affiliated with, endorsed by, or sponsored by HUD, FHA, VA, USDA, or any state Housing Finance Agency. Verify all program details directly with the issuing agency before applying. All loans subject to credit approval and underwriting. NMLS# 2620881.

Bring this to your application

Documents required for an FHA loan

A complete file is the single biggest driver of a fast close. Start with your income path, then select the loan purpose below to see the exact documents your transaction needs.

Income documents

What income paperwork do I need?

Pick the column that describes how you earn money. Only one column applies to most borrowers.

W-2

Salaried / hourly employee

If you receive a W-2 from an employer

✓Most recent 30 days of pay stubs (all pages, year-to-date)
✓Last 2 years of W-2 statements
✓Signed 4506-C so the lender can verify IRS transcripts
✓Employer name, phone, and address for a written verification
✓2 years of federal tax returns (all pages, all schedules) if you also have side income or rental property

Underwriters use your gross base pay plus any overtime, bonuses, or commissions that are documented for at least 2 years.

1099

Self-employed / contractor

If you earn 1099 income or own a business

✓2 years of personal federal tax returns (all pages, all schedules, signed)
✓2 years of business tax returns (1120, 1120S, or 1065) + K-1s if applicable
✓Year-to-date profit and loss statement (P&L) signed by the borrower
✓Current balance sheet for the business (signed by the borrower or CPA)
✓Business license, CPA letter, or corporate formation documents showing 2+ years in operation

Self-employed income is based on the bottom-line net income your business generates, not your gross deposits. Averaging the last 2 years is standard.

Universal requirements

Documents every borrower must provide

Regardless of income type or loan purpose, the underwriter will need these items to verify identity, assets, credit, and special circumstances.

Identity & legal status

✓Government-issued photo ID (driver’s license or passport)
✓Social Security card
✓Permanent residents: green card
✓FHA financing is limited to U.S. citizens and lawful permanent residents under current HUD rules

Assets & bank statements

✓Last 2 months of bank statements (all pages, all accounts)
✓Recent retirement / brokerage statements
✓Documentation for any large or unusual deposits
✓Proof of reserve funds if required by program

Credit & explanation letters

✓Letter of explanation for credit inquiries in the last 90 days
✓Letter of explanation for any employment gaps
✓Letter of explanation for large deposits
✓Bankruptcy discharge or dismissal papers (if applicable)

Other circumstances

✓Divorce decree + child-support order (if applicable)
✓Lease agreements for other properties you own
✓Court-ordered judgments / settlements
✓Military orders or discharge papers (if applicable)

Documents by loan purpose

What else is required — organized by your goal

The underwriter also needs identity, asset, property, and credit documents. Choose the column that matches your transaction type.

Buy

FHA purchase

Buying a home with FHA

✓Signed gift letter + donor ability proof (if using gift funds)
✓DPA award letter from an approved program (if applicable)
✓Fully executed purchase contract (all pages, all addenda)
✓Homeowners insurance quote or binder
✓HOA contact info + monthly dues (if applicable)
✓Termite / well / septic reports if required by state

100% of the 3.5% down payment may come from a documented gift or approved DPA. Seller concessions can cover up to 6% of the sales price toward closing costs.

Refi

FHA refinance

Refinancing an FHA or other loan

✓Current mortgage statement (most recent 30 days)
✓Original note or settlement statement from the current loan
✓2 years of federal tax returns if self-employed or using rental income
✓Proof of homeowners insurance and current property taxes
✓Current HOA statement (if applicable)
✓Cash-out only: letter stating the purpose of the funds

FHA offers rate/term refinances and cash-out refinances up to program limits. FHA Streamline refinances may require fewer documents.

HELOC

Home equity line

HELOC — not FHA-insured

✓Current mortgage statement showing balance and payment
✓Proof of homeowners insurance
✓Recent property tax bill
✓Pay stubs or tax returns (same income rules as above)
✓Bank statements showing reserves

A HELOC is a separate revolving line of credit secured by your home. It is not FHA-insured. Eligibility depends on available equity, credit, and ability to repay.

HECM

FHA reverse mortgage

HECM for homeowners 62+

✓Government-issued photo ID proving age 62 or older
✓HUD-approved HECM counseling certificate (mandatory before application)
✓Current mortgage statement and property tax bill
✓Proof of homeowners insurance, HOA dues, and flood insurance (if applicable)
✓Social Security award letter / pension / retirement income docs
✓Home repair bids (if required for property condition)

HECM is an FHA-insured reverse mortgage. Borrowers must complete HUD-approved counseling and maintain taxes, insurance, and property upkeep.

Why completeness matters

A missing page from a bank statement, an unsigned gift letter, or a missing explanation letter is the most common reason FHA loans get delayed. Submit everything at once — even documents you think may not matter — so your Simply Approved Mortgages Loan Officer can clear conditions faster.

Employment verification · Handbook Update 18

How FHA verifies your employment: written, electronic, and reverification

Quick answer

FHA now formally defines three ways a lender documents your job. A written verification (WVOE) is your employer confirming your job and income in writing. An electronic verification (EVOE) is a system-generated report pulled straight from your employer’s payroll system through a third-party vendor — with your signed authorization. And no matter which one is used, the lender must reverify that you’re still employed within 10 days before closing. You sign one authorization; your loan officer orders the rest.

Written verification (WVOE)

A document-based verification that involves human review: the lender or its third-party verification (TPV) vendor sends a form to your employer, and the employer confirms your position, start date, and income in writing. Usually paired with your most recent pay stub.

Electronic verification (EVOE)

A system-generated report pulled automatically — without human involvement — directly from your employer’s payroll system through a TPV vendor. FHA requires your signed authorization, and the data must fall within HUD’s maximum document age at closing.

Reverification before closing

The final "still employed?" check, completed by the lender or its vendor through independently verified direct contact with your employer — a phone call or an electronic check both count. HUD requires it within 10 days before your Note date (closing day), and electronic reverification data must be no more than 30 days old.

What HUD requires (the minimum)

Verify your most recent two years of employment and income.
Document current employment with one of: a recent pay stub plus a written VOE covering two years; an EVOE covering two years; or a pay stub plus two years of W-2s plus a documented phone verification.
Reverify employment within 10 days before the Note date on every file — verbal or electronic.

What your lender may add (overlays)

Individual lenders and investors may require more than HUD’s minimum — for example a same-day reverification, an independent employer phone lookup, or extra pay stubs. Overlays are the lender’s own rules, not FHA rules, and they vary by company. Ask your Simply Approved Mortgages Loan Officer which apply to your file.

What this means for you: expect two touches with your employer — one early (verification) and one right before closing (reverification). Let your HR or payroll contact know both are coming so nothing delays your closing. Changing jobs mid-loan? Tell your loan officer immediately — a new employer restarts the verification.

Source: HUD Single Family Housing Policy Handbook 4000.1, employment-income documentation standards for automated (TOTAL Scorecard) and manual underwriting — definitions added in Update 18, effective August 12, 2026. Educational summary only; Simply Approved Mortgages LLC is not affiliated with HUD or FHA. Your Simply Approved Mortgages Loan Officer confirms the exact documentation for your file. Not a commitment to lend.

Start to keys

How to apply for an FHA loan — 7 steps

A plain-English walkthrough from credit prep through closing. Many of our recent FHA purchase files close in ~21 days.*

1
Pull your credit and clean it up
Pull all three bureau reports at MyITINCredit.com ($1 for 15 days), dispute errors, and bring revolving-card utilization below 30% (ideally under 10%). FHA underwriting uses the middle of your three FICO scores.
2
Speak with a Simply Approved Mortgages Loan Officer
A Simply Approved Mortgages Loan Officer reviews your income, debts, assets, and credit against FHA guidelines (580+ FICO for 3.5% down, standard 43% back-end DTI that can stretch to approximately 56.99% with AUS + compensating factors, 2-year work history) and your county FHA loan limit.
3
Get a written FHA pre-approval letter
After document review and a pass through automated underwriting (TOTAL Scorecard via DU/LP), you receive a written pre-approval letter listing agents and sellers take seriously.
4
Find an FHA-eligible home
Tour homes inside your verified budget. The property must meet HUD Minimum Property Requirements. Your loan officer and agent flag obvious red flags before you write an offer.
5
Go under contract, order the FHA appraisal, lock your rate
Once you have an accepted offer, the FHA-approved appraiser is ordered, title is opened, the rate is locked, and the underwriter begins clearing conditions in parallel.
6
Clear underwriting conditions
Return any remaining documents the underwriter requests (updated paystubs, bank statements, gift letters, insurance binder). Same-day responses keep FHA files on track.
7
Receive your Closing Disclosure and close
Per TRID, your Closing Disclosure is delivered at least 3 business days before signing. You sign, funds wire, the deed records, and the keys are yours.

*Typical timing on recent purchase files; actual close timing varies by program, property, appraisal/title turn times, and borrower responsiveness. Not a guarantee of approval, rate, or close date.

The honest trade-off

FHA loan pros and cons

FHA is powerful but not perfect. Here is the straight read on both sides before you sign.

Pros

+
580 FICO at 3.5% down.
More flexible than nearly every conventional program.
+
Standard 43% back-end DTI; can stretch to approximately 56.99% for qualified borrowers.
Higher debt loads can still qualify with compensating factors.
+
100% gift funds allowed.
The full down payment can come from family, employer, or DPA.
+
Assumable loan.
A qualified future buyer can take over your FHA at your rate.
+
6% seller concessions.
Sellers can fund a meaningful portion of your closing costs.
+
Short post-event waiting periods.
2 yrs post Ch.7 discharge, 3 yrs post foreclosure (HUD).

Cons

!
Annual MIP for life when LTV > 90%.
Refinancing into conventional is the standard exit.
!
County loan limits cap the amount.
High-cost homes may need conventional or jumbo instead.
!
HUD property standards required.
Safety, soundness, security issues must be repaired pre-close.
!
Primary residence only.
No second homes or pure investment properties.
!
Upfront MIP increases loan size.
1.75% of the base loan amount, typically financed.
!
Lender overlays may apply.
Some lenders require a higher score than HUD’s 580 floor.

Head-to-head

FHA vs Conventional loans — which one wins?

No universal winner. The breakpoint is typically around 680–700 FICO with 5%+ down.

Feature	FHA Loan	Conventional Loan
Minimum FICO	580 (or 500 with 10% down)	620 (best pricing 740+)
Minimum down payment	3.5%	3% (HomeReady/Home Possible); 5% standard
Max DTI	43% standard (up to ~56.99% with AUS + factors)	45% standard (up to 50% with AUS + factors)
Mortgage insurance	UFMIP + Annual MIP	PMI only when < 20% down
MI removal	After 11 yrs if 10%+ down; life of loan if < 10%	Auto at 78% LTV (HPA); request at 80%
Property types	Primary 1–4 unit only	Primary, 2nd home, investment
Seller concessions	Up to 6%	3% / 6% / 9% by down-payment tier
Loan limits	Floor $541,287 · Ceiling $1,249,125	Conforming limits per FHFA
Assumable	Yes — by qualified buyer	Rarely
Best for	Lower FICO, higher DTI, smaller down	700+ FICO with 5%+ down

A Simply Approved Mortgages Loan Officer will run both programs side-by-side on your actual numbers so the decision is mathematical.

Illustrative scenarios

FHA loan examples — illustrative borrower scenarios

Six illustrative borrower profiles that match common FHA approval patterns. Results are not guaranteed.

Illustrative example

Profile

First-time buyer, 605 FICO, $320K purchase

Best fit

FHA 3.5% Down

Seller-paid closing costs, closed in ~21 days with a Simply Approved Mortgages Loan Officer.

Illustrative example

Profile

Higher DTI, 52%, 660 FICO, 6 mo reserves

Best fit

FHA with Compensating Factors

Approved through automated underwriting using reserves and residual income.

Illustrative example

Profile

Rebuilding credit, 580 FICO, 2-yr-old event

Best fit

FHA 3.5% Down + Gift

Documented gift covered the full 3.5% down payment.

Illustrative example

Profile

2-unit owner-occupant (house hack)

Best fit

FHA on 2-Unit Primary

Lives in one unit, rents the other, qualifies on projected rental income per HUD.

Illustrative example

Profile

Refinance exit baked in

Best fit

FHA Today → Conv. Later

Takes FHA for 3.5%-down access, refis to conventional at ~20% equity to drop MIP.

Illustrative example

Profile

Manufactured home on owned land

Best fit

FHA on Manufactured

HUD-tagged unit meeting FHA structural standards financed with land + home.

Illustrative borrower profiles for educational purposes only — not a quote, offer, approval, rate lock, or commitment to lend. Actual program eligibility, pricing, and cash-to-close depend on full underwriting.

Expert Insight

FHA is the most misunderstood mortgage in America. It is not a “bad-credit loan” — it is a federally insured product built to lower the bar to homeownership for working families. The right move is almost never “FHA forever.” It is “FHA today to get into the home, then refinance out of MIP once equity and credit support it.” Build the exit strategy into the entry plan and FHA becomes one of the most powerful tools in the buyer toolkit.

Simply Approved Mortgages Team

Licensed Loan Officers • NMLS# 2620881

FHA Loans — Frequently Asked Questions

Answers to the most common FHA loans questions, written by licensed loan officers.

An FHA loan is a residential mortgage insured by the Federal Housing Administration (FHA), an agency of the U.S. Department of Housing and Urban Development (HUD). HUD-approved lenders originate the loan and FHA insures the lender against loss, which allows lower credit scores and smaller down payments than most conventional programs.

Trusted government resources

These independent government resources can help you research mortgage programs, rates, and your rights before you apply.

Simply Approved Mortgages is not affiliated with HUD, the CFPB, the FTC, the VA, or any other government agency. Links are provided for your independent verification.

FHA product library

Explore every FHA loan product and topic

Deep-dive references on each FHA program, insurance rule, waiting period, and qualifying calculator.

FHA Loans — Complete Guide

Every FHA program, requirement, and current rule in one place.

FHA 203(b) Purchase

The standard 3.5%-down FHA purchase loan.

FHA 203(k) Renovation

Buy + renovate in one FHA loan.

FHA Streamline Refinance

Faster refinance for existing FHA loans.

FHA Cash-Out Refinance

Tap equity up to 80% LTV.

FHA HECM Reverse Mortgage

HUD-insured reverse mortgage for age 62+.

FHA Loan Limits

County floor, ceiling, and how limits are set.

FHA Mortgage Insurance

UFMIP, Annual MIP, and payoff timing.

FHA Appraisal Requirements

HUD MPR standards and what appraisers check.

FHA Gift Funds

Who can gift, documentation, and the paper trail.

FHA DTI Calculator

Run your ratios against FHA benchmarks.

FHA vs Conventional

Compare total cost by credit tier.

FHA Waiting Periods

BK, foreclosure, and short-sale timelines.

Open the Colorado FHA hub →

Local FHA hubs

FHA loans by state

FHA rules are federal, but limits, DPA programs, and property nuances are local. Jump to your state hub for county limits, local DPA layers, and a directory of every city and county.

State hub

FHA Loans in Colorado

FHA loan limits, DPA programs, and local guidance for every Colorado county and metro.

State hub

FHA Loans in Florida

FHA county limits, insurance considerations, and DPA options across Florida.

Open the Florida FHA hub →

Explore the full guide

Keep going — related FHA & purchase guides

Each of these is a deep-dive on one piece of the FHA and purchase-mortgage process.

Guide

All purchase mortgage programs compared

FHA, VA, USDA, Conventional, Jumbo, Doctor, 1%-Down and Non-QM side by side.

Guide

First-Time Home Buyer Guide

Programs, grants, and the exact playbook for buying your first home.

Guide

2026 FHA Loan Limits by County

HUD-published floor and ceiling, with a county lookup link.

Guide

2026 Conforming Loan Limits

Compare against the FHA limits to see which program fits your price point.

Guide

Mortgage Pre-Approval

Get a written, underwriter-reviewed letter you can hand to a listing agent.

Guide

How Much Home Can I Afford?

Run real DTI, taxes, insurance, and reserves against your income.

Guide

Closing Costs Explained

Every line of the Loan Estimate — and how to lower it with seller credits.

Start My Approval →See Today's Rates Or call 877-813-7219

FHA loan approval

Ready to take the next step?

Pick your loan type and complete a short, tailored request on our secure application page. Your Simply Approved Mortgages Loan Officer follows up within one business day.

No obligation. Soft-pull options may be available.*

By state and city

FHA Home Loans by State, City, and County

County loan limits, property taxes, insurance costs, and market conditions change what this program looks like locally. Pick your market for the version written for it. Simply Approved Mortgages LLC arranges residential mortgage loans in Florida and Colorado.

Florida

FHA Home Loans in Florida

Cities

Counties

Colorado

FHA Home Loans in Colorado

Cities

Counties

Internal library

Related mortgage guides across our library

Follow the next relevant guide for your scenario.

FHA loans

FHA loan library

Simplify Your Mortgage Journey with These Resources

Home Value Report

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Mortgage Calculator

Home Affordability Calculator

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Mortgage Document Checklist

Down Payment Assistance

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