Core Insights - The Federal Housing Administration (FHA) has been instrumental in promoting homeownership for nearly 100 years, issuing around 50 million loans to support first-time home buyers and low-to-moderate-income households [1] FHA Loan Overview - An FHA loan is a mortgage insured by the FHA, which is a self-funded division of the Department of Housing and Urban Development, designed to protect lenders against loan losses and expand access to loans for lower-income households [2] - FHA loans can be utilized for purchasing homes or refinancing existing mortgages, with specific benefits and requirements that vary by lender [3] Qualification Criteria - Borrowers typically need a FICO score of 580 or higher to qualify for a down payment of 3.5%, while those with scores as low as 500 may qualify with a 10% down payment [4] - The FHA requires a debt-to-income (DTI) ratio of 43% or less, although exceptions can be made for higher credit scores [6] Loan Limits and Insurance - FHA sets maximum loan limits based on county, with limits of $541,287 in low-cost areas and $1,249,125 in high-cost areas for single-family homes in 2026 [6] - To mitigate lender risk, the FHA charges both upfront and ongoing mortgage insurance premiums, which are required for the life of the loan unless a borrower makes a down payment of 10% or more [8] Types of FHA Loans - The FHA 203(b) loan is the primary program for home purchases, allowing down payments as low as 3.5% [11] - FHA also offers adjustable-rate mortgages, rehabilitation loans for home improvements, and loans for manufactured homes [12][17][15] Special Programs - The Good Neighbor Next Door program provides significant discounts for public servants purchasing homes in revitalization areas [20] - The FHA Disaster Victims Mortgage 203(h) offers loans with no down payment for disaster victims [21] Alternatives to FHA Loans - Conventional loans may offer lower mortgage insurance costs and could be more beneficial for well-qualified borrowers [24][25] - VA loans provide no-down-payment options for military personnel, while USDA loans offer 100% financing for qualifying rural areas [26][27] Refinancing Options - FHA provides various refinancing options, including the Simple Refinance, Streamline Refinance, and cash-out refinance, catering to different borrower needs [30][31][32] - The FHA 203(k) refinance is specifically designed for homeowners looking to fund renovations [34]