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MORTGAGE LEARNING CENTER | FHA LOANS
The FHA Loan Guide: Requirements, Down Payment, and Mortgage Insurance Explained
Everything you need to know about FHA loans: who they are for, how to qualify, what mortgage insurance costs, the 2026 Oregon loan limits, and how to decide if FHA is the right fit.
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What is an FHA loan?
An FHA loan is a mortgage insured by the Federal Housing Administration. Eligible buyers can purchase a primary residence with as little as 3.5% down and a credit score as low as 580. Government insurance lets lenders accept smaller down payments, lower credit scores, and higher debt-to-income ratios than many conventional loans. FHA requires upfront and annual mortgage insurance premiums.
Down payment as low as
3.5%
Credit score as low as
580
Key Takeaways
If you only have a minute, these are the points that matter most for your purchase.
Down payment as low as 3.5% with a 580+ credit score; 10% down with scores from 500 to 579 at lenders that allow it.
More flexible on credit history and debt-to-income ratio than most conventional loans.
Mortgage insurance has two parts: 1.75% upfront (usually financed) and an annual premium paid monthly.
With less than 10% down, the annual premium lasts for the life of the loan. Many borrowers later refinance to remove it.
FHA loans are for primary residences, including 2 to 4 unit properties when you live in one unit.
Gift funds and down payment assistance grants can cover the down payment.
What's Inside This Guide
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SECTION 01 | GETTING STARTED
Who Is an FHA Loan Best For?
FHA loans were built to make homeownership more accessible. Most people in your situation choose FHA when one or more of these is true:
- You are a first-time buyer with a modest down payment.
- Your credit score is in the 500s or 600s.
- You have past credit challenges such as a bankruptcy or late payments that are behind you.
- Your debt-to-income ratio is higher than conventional loans prefer.
- You want to buy a 2 to 4 unit property and live in one unit.
- You are buying a home that needs work and want to finance repairs (FHA 203(k)).
TIP
If your credit is strong and you have 5% or more down, conventional may cost less over time. Read our FHA vs. Conventional guide to compare side by side.
SECTION 02 | REQUIREMENTS
FHA Loan Requirements
These are the program guidelines FHA sets for every borrower. Individual lenders can layer their own rules on top.
| Requirement | FHA Guideline |
|---|---|
| Minimum credit score | 580 for 3.5% down; 500 to 579 with 10% down (lender overlays may apply) |
| Down payment | 3.5% minimum with 580+ |
| Debt-to-income ratio | Commonly up to about 43%, and often up to 50% or more with automated approval and strong factors |
| Employment | Steady income, generally a two-year history |
| Occupancy | Primary residence, move in within 60 days |
| Mortgage insurance | Required on all FHA loans |
| Property | Must meet FHA minimum property standards and be appraised by an FHA appraiser |
| Waiting periods | Generally 2 years after Chapter 7 bankruptcy, 3 years after foreclosure, with re-established credit |
Credit
FHA allows 580 for 3.5% down and 500 to 579 with 10% down, but some lenders set a higher floor.
Down payment
With a 580+ score, plan on at least 3.5% of the price. Gift funds and grants can help cover it.
Debt-to-income
Your monthly debts compared with income. About 43% is common, and 50% or more is possible with strong factors.
Employment
Lenders look for steady income, generally with a two-year work history.
Occupancy
The home must be your primary residence, and you move in within 60 days.
Waiting periods
Generally 2 years after Chapter 7 bankruptcy and 3 years after foreclosure, with re-established credit.
DO THIS TODAY
Gather pay stubs, two years of work history, and savings records before talking to a broker.
SECTION 03 | MORTGAGE INSURANCE
FHA Mortgage Insurance Explained
Every FHA loan has mortgage insurance, called MIP (mortgage insurance premium). It protects the lender, and it is what makes the low down payment and flexible credit possible.
Upfront MIP
1.75%
1.75% of the base loan amount, usually rolled into the loan instead of paid in cash.
Annual MIP
0.55%
For most 30-year FHA loans, 0.55% of the loan balance per year, paid monthly with your mortgage payment. Shorter terms and smaller loans can carry lower premiums.
How long does FHA mortgage insurance last?
How long you pay the annual premium depends on the down payment you made when you bought the home.
Less than 10%
Life of the loan
10% or More
11 Years
The good news is that FHA mortgage insurance is not forever for most borrowers in practice. Once your home value rises or your balance falls enough to reach about 20% equity, many borrowers refinance into a conventional loan with no mortgage insurance.
NEXT READ
See our Refinance Guide to learn how removing mortgage insurance through a refinance works.
SECTION 04 | LOAN LIMITS
FHA Loan Limits in Oregon (2026)
FHA sets maximum loan amounts by county. Limits for counties we serve most often include:
| County | 2026 One-Unit FHA Limit |
|---|---|
| Marion County (Salem, Keizer) | $541,287 |
| Polk County | $541,287 |
| Lane County (Eugene, Springfield) | $541,287 |
| Benton County (Corvallis) | $615,250 |
$541,287
One-unit limit in Marion, Polk, and Lane counties.
$615,250
One-unit limit in Benton County.
GOOD TO KNOW
Limits are higher for 2 to 4 unit properties. If your purchase price is above your county’s FHA limit, a conventional or jumbo loan may be a better fit. Ask us for the limit in your county.
SECTION 05 | PROPERTY
FHA Property Requirements
An FHA appraisal confirms both value and that the home meets minimum property standards. In plain terms, the home must be safe, sound, and secure.
Common Items an FHA Appraiser Flags
Peeling paint on homes built before 1978
Missing handrails on stairs
Roof with less than about two years of remaining life
Broken windows or exposed wiring
Non-working heating systems
Water, sewer, or foundation problems
TIP
Most flagged items are minor and can be repaired before closing. Homes that need major work are often a better fit for an FHA 203(k).
SECTION 06 | RENOVATION
FHA 203(k) Renovation Loans
A 203(k) loan lets you finance the purchase price and the cost of repairs or improvements in one FHA loan, with one closing.
Limited 203(k)
For non-structural repairs such as flooring, paint, kitchens, appliances, and roofs, with a cap on total repair costs.
Standard 203(k)
For larger projects, including structural work, with a HUD consultant overseeing the work.
A 203(k) loan lets you finance the purchase price and the cost of repairs or improvements in one FHA loan, with one closing.
30-60 DAYS
Renovation loans typically take 30 to 60 days to close.
SECTION 07 | REFINANCE
FHA Streamline Refinance
If you already have an FHA loan, the FHA Streamline is one of the simplest refinances available. It typically requires:
No Appraisal
No appraisal in most cases
Waiting Period
At least 210 days since closing and six on-time monthly payments
Net Tangible Benefit
A net tangible benefit, such as a lower payment
No Cash Out
No cash out
SECTION 08 | PROS AND CONS
Pros and Cons of FHA Loans
PROS
- Low 3.5% down payment
- Credit scores starting at 580
- Flexible debt-to-income ratios
- Gift funds and grants allowed
- Assumable by qualified buyers
- Streamline refinance available
CONS
- Upfront and annual mortgage insurance
- MIP often lasts the life of the loan
- Loan limits by county
- Primary residences only
- Stricter property condition standards
- Usually one FHA loan at a time
SECTION 09 | FAQ
FHA Loan FAQs
What credit score do I need for an FHA loan?
FHA allows scores as low as 580 for 3.5% down and 500 to 579 with 10% down. Individual lenders may require more, which is why comparing lenders matters.
How much is the down payment on an FHA loan?
As little as 3.5% of the purchase price with a 580 or higher score. Gift funds and down payment assistance grants can cover it.
Can I get rid of FHA mortgage insurance?
With 10% or more down, it ends after 11 years. With less than 10% down, it lasts the life of the loan, so most borrowers remove it by refinancing into a conventional loan once they reach about 20% equity.
Can I use an FHA loan more than once?
Yes, but generally only one FHA loan at a time. Exceptions exist for relocation, a growing family, and other documented situations.
Can I buy a duplex with an FHA loan?
Yes. FHA allows 2 to 4 unit properties with 3.5% down if you live in one of the units.
Is FHA only for first-time buyers?
No. Anyone who meets the requirements and will live in the home can use FHA.
Can I get an FHA loan after bankruptcy?
Generally yes, about two years after a Chapter 7 discharge, and sometimes during a Chapter 13 repayment plan with court approval.
How long does an FHA loan take to close?
Typically 21 to 30 days after an accepted offer and complete documents. Pre-approval usually takes one to two business days.
SECTION 10
What Happens Next?
Mortgage Marketplace | NMLS #2367229
(503) 210-1480
info@mmhomeloans.com
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What happens next is a short conversation. A licensed broker reviews your credit, income, and savings, compares FHA and conventional options across our lender network, and shows you which one costs less for your situation. If FHA isn’t your best fit, we will tell you that too.
Before you make your mind up about FHA, how open-minded would you be to seeing both options side by side?
About Mortgage Marketplace
Mortgage Marketplace is an independent mortgage brokerage headquartered in Salem, Oregon, with a second office in Eugene. We compare loan options from over 70 wholesale lenders, so you see more than one bank’s menu.
- Independent Brokerage, Many Lenders | Licensed in 7 States | NMLS #2367229 | Decades of Combined Experience
- Licensed in Oregon, California, Washington, Idaho, Texas, Florida, and Montana
- Salem office: 3723 Fairview Industrial Dr SE, Suite 190, Salem, OR 97302
- Phone: (503) 210-1480 | Email: info@mmhomeloans.com
- Website: mortgagemarketplace.loans
- Housing Oregon’s Heroes: discounted loan fees for teachers, first responders, health care workers, law enforcement, military and veterans. housingoregonsheroes.com
More Free Guides in the Mortgage Learning Center
First-Time Home Buyer Guide | VA Loan Guide | FHA Loan Guide | FHA vs. Conventional | Why Use a Mortgage Broker | DSCR Loan Guide | Refinance Guide | Oregon Home Buying Guide | Down Payment Assistance Guide
Important Disclosures
This guide is for educational purposes only and is not a commitment to lend or an offer of credit. All loans are subject to borrower qualification, property evaluation, sufficient equity for refinances, underwriting guidelines, and final credit approval. Program guidelines change without notice.
Mortgage Marketplace LLC, NMLS #2367229 (nmlsconsumeraccess.org).
Equal Housing Opportunity. For current interest rates and payment estimates, use our mortgage calculator or speak with a licensed mortgage broker; this guide intentionally contains no rate quotes or payment examples. Mortgage Marketplace is not affiliated with or endorsed by the U.S. Department of Housing and Urban Development (HUD) or the Federal Housing Administration (FHA).
Last updated: November 2026
Compare Your FHA Loan Options
Before you make your mind up about FHA, how open-minded would you be to seeing both options side by side?