An FHA loan is a government-insured mortgage designed for buyers whose credit or savings do not fit a conventional loan. Under FHA guidelines, a buyer with a credit score of 580 or higher can put down as little as 3.5%, and buyers with lower scores may still qualify with a larger down payment. Individual lenders can set stricter rules, which is why where you apply matters.
FHA credit score and down payment rules
- 580 or higher: eligible for the minimum 3.5% down payment under FHA guidelines.
- 500 to 579: FHA guidelines allow financing with 10% down. Many lenders will not go this low, so options are limited.
- Below 500: not eligible for an FHA-insured loan.
These are the FHA minimums. Lenders often add their own requirements, called overlays, such as a higher minimum score. A file one lender turns down may fit another lender's guidelines.
What else lenders look at besides your score
- Debt-to-income ratio: your monthly debts compared to your income.
- Employment and income history: usually two years of steady work or documented income.
- Recent credit events: bankruptcies, foreclosures, collections and late payments, and how long ago they happened.
- Reserves and compensating factors: savings left after closing, a long rental history and other strengths can help a borderline file. See our video on compensating factors.
Costs to plan for with an FHA loan
FHA loans carry mortgage insurance premiums: an upfront premium that can be financed into the loan and an annual premium paid monthly. How long the annual premium lasts depends on your down payment and loan term. Ask for a full Loan Estimate so you can see the real monthly payment, not just the rate.
Combining FHA with New Jersey down payment help
Eligible New Jersey buyers may be able to pair an FHA loan with NJHMFA down payment assistance. Read how NJHMFA assistance works with an FHA loan and check current program rules at njhmfa.gov.
How to improve your odds before you apply
- Check all three credit reports and dispute errors.
- Pay down credit card balances. High utilization can pull a score down quickly.
- Avoid opening new credit or making large purchases before closing.
- Keep documentation for any large deposits.
Our short videos cover FHA loans: 3.5% down and credit score basics and improving your credit to become a homebuyer.
Frequently asked questions
What is the minimum credit score for an FHA loan?
FHA guidelines set 580 for the 3.5% down payment and 500 for a 10% down payment. Many lenders require more than the FHA minimum.
Can I get an FHA loan after a denial elsewhere?
Often, yes. Different lenders have different overlays. Read what to do after a mortgage denial.
Why use a broker for an FHA loan?
A broker can compare FHA guidelines across many lenders and find one that fits your credit profile. See the JahnLends FHA loan page for more.
Call JahnLends in Woodbridge at (732) 754-7474 or start your pre-approval online →
FHA guideline figures are general and can change; confirm current requirements with HUD or a loan officer. JahnLends is the Woodbridge, NJ branch of AMS Mortgage Services, NMLS# 145742. Equal Housing Opportunity. For information purposes only. This is not a commitment to lend or extend credit. All loans are subject to credit approval. Other restrictions may apply.