FHA Loan First Time Home Buyer Guide: Requirements, Credit Score, and Down Payment

FHA Loan First Time Home Buyer Requirements at a Glance

An FHA loan is a mortgage insured by the Federal Housing Administration. The FHA does not lend you the money. It insures the lender against loss, which is why a lender can accept a lower credit score and a smaller down payment than a conventional loan allows.

For a first time home buyer that trade is the whole appeal. You get in with less cash. You pay for it with mortgage insurance.

Here is the short version before we go deeper:

3.5% down with a credit score of 580 or higher

10% down if your score falls between 500 and 579

Debt to income generally up to 43%, higher with compensating factors

Must be your primary residence

Mortgage insurance is required, upfront and annually

The house has to pass an FHA appraisal, not just you

FHA Loan Requirements: Credit, Income, and Occupancy

Occupancy. The home must be your primary residence. FHA is not available for an investment property or a second home. You are expected to move in within 60 days of closing.

Income and employment. Lenders want a documented, stable income history, generally two years. Gaps are not automatically disqualifying but they need an explanation.

Debt to income ratio. The common guideline is 43% of gross monthly income across all debt payments. Automated underwriting approves higher ratios when you have compensating factors like cash reserves, a long tenure at the same employer, or a minimal payment shock from your current rent.

Property type. Single family, an approved condo, a manufactured home on a permanent foundation, or a two to four unit building all qualify, as long as you occupy one unit.

FHA Loan Credit Score Minimums

The FHA floor is 500. That is the agency rule, not the practical one.

Most lenders apply their own overlay well above the FHA minimum, commonly 620 or higher. This is the single most misunderstood part of the program. A borrower reads that FHA allows a 500 score, applies, and gets declined by a lender whose internal floor is 640.

If your score sits in the 500s, shop more than one lender. The spread between what FHA permits and what an individual lender permits is wide, and it is entirely up to the lender.

FHA Down Payment Requirements

The FHA down payment requirement is tiered by credit score:

580 or higher: 3.5% of the purchase price

500 to 579: 10% of the purchase price

On a $350,000 home that is the difference between $12,250 and $35,000. Crossing the 580 line is often the highest return thing a first time buyer can do before applying.

Down payment funds can come from savings, a documented gift from a family member, or an approved down payment assistance program. Gift funds need a letter confirming the money is not a loan.

FHA Mortgage Insurance: What It Costs and How Long It Lasts

This is what the low down payment actually costs you, and it is where FHA gets expensive over time.

Upfront premium. 1.75% of the loan amount, normally rolled into the loan rather than paid at closing.

Annual premium. Collected monthly as part of your payment. The rate varies with your loan term and how much you put down.

The part that matters most: if you put down less than 10%, the annual premium stays for the life of the loan. It does not fall off when you reach 20% equity the way conventional private mortgage insurance does. The only way out is refinancing into a conventional loan.

Put down 10% or more and the annual premium drops off after 11 years.

Run that math before you commit. On a 30 year loan, permanent mortgage insurance can quietly outweigh the benefit of the smaller down payment.

FHA Appraisal Requirements and Minimum Property Requirements

Here is where FHA deals die, and it is almost never the borrower's fault.

FHA does not just underwrite you. It underwrites the house.

Every FHA loan requires an appraisal that checks the property against FHA Minimum Property Requirements. The appraiser is evaluating three things: safety, security, and soundness. If the property fails, the loan does not close until somebody fixes the problem. Usually that somebody is the seller, and sellers walk.

The failures that come up most often:

A roof at the end of its life. The appraiser wants a roof that keeps water out and has meaningful remaining useful life. An aging roof with no documented replacement is one of the most common reasons an FHA appraisal comes back with conditions attached.

Unpermitted work. An addition, a converted garage, or an enclosed porch that never had a permit can be excluded from the square footage entirely. That lowers the appraised value and can break the financing outright.

Peeling paint on a pre-1978 home. Lead paint rules apply and any chipping or peeling surface has to be corrected before closing.

Structural and safety hazards. Missing handrails, exposed wiring, an inoperable furnace, and standing water under the house all trigger conditions.

You find out about all of it after you are under contract, after you have paid for the appraisal, and often after your inspection period has already closed.

Why This Hits Harder in Pinellas County

We pulled the county records. As of July 2026, 201,760 properties in Pinellas County were built in 2005 or earlier and have no roof permit on record.

That does not prove those roofs are original. Permits get filed under prior owners, records get miscoded, and some work predates digital filing. What it does mean is that for a large share of the housing stock here, there is no documented roof replacement for an FHA appraiser to point to.

The same logic applies to additions. Pinellas and Hillsborough counties hold 1.24 million permit records between them. The useful signal is not only what is on file. It is what is missing on a house that has obviously had work done.

Florida insurance compounds it. Some carriers will not write a policy on a roof past a certain age, and your lender requires coverage before closing. An old roof can kill the same deal twice.

How to Protect Your FHA Offer

Pull the permit history before you offer. If a listing advertises a renovated kitchen, a converted garage, or an addition, the permit record either backs that up or it does not. A few minutes of research costs less than a dead contract.

Ask about roof age in writing. Florida sellers know the question is coming, for FHA and for insurance both. If there is no permit and no receipt, treat the roof as a negotiation item from the start.

Get insurance quotes early. Do not wait until you are under contract to find out the policy costs $8,000 a year.

Do not skip the inspection. An FHA appraisal is not a home inspection. It checks minimum standards, not condition. They are different jobs and you want both.

Is an FHA Loan Right for You as a First Time Buyer

FHA makes sense when your credit score or your savings are the binding constraint. It is the most forgiving common loan program on both counts, and for many first time buyers it is the only realistic path to a closing table.

It makes less sense when you have strong credit and 5% or more to put down. A conventional loan at 5% down with private mortgage insurance often costs less over the life of the loan, because conventional PMI comes off at 20% equity and FHA mortgage insurance does not.

Ask your lender for a side by side on total cost over the number of years you actually expect to stay in the house, not just the monthly payment. The monthly numbers can look nearly identical while the ten year numbers are thousands apart.

Check the House Before the Appraiser Does

A HouseFax report is $12.99 and pulls the county records for any address in Pinellas or Hillsborough County: full permit history, the recorded sales chain, lien and title status, evacuation and flood zone, tax history, and the gap between assessed value and asking price.

For an FHA buyer the permit section is the one that matters most. It shows what the county has on file and what it does not, before you commit to a property that may not survive the appraisal.

Check the address first. Then write the offer.