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FHA Down Payment Guide

Can I Qualify for an FHA Loan With 3.5% Down?

Possibly. A 580-or-higher qualifying credit score can open the 3.5% down path under HUD rules. Income, debts, the property and the rest of your application still have to qualify.

Check Your Eligibility →
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Start With the Down Payment

3.5% down is a starting point, not an approval.

HUD Handbook 4000.1 allows up to 96.5% loan-to-value on eligible FHA purchases that qualify for maximum financing. That leaves a minimum required investment of 3.5% of the property’s Adjusted Value. For a purchase, Adjusted Value generally means the lower of the appraised value or purchase price, after required adjustments.

This guide covers eligible primary-residence purchases of one to four units, subject to owner-occupancy and property rules. Income, debts, assets, credit history, appraisal and the county loan limit still matter. Closing costs, prepaid items and mortgage insurance are separate from the minimum down payment.

Source: HUD Handbook 4000.1, purchase LTV and minimum required investment

A down payment is only one part of cash to close. An appraisal below the purchase price can also increase the funds you need.
HUD Credit-Score Bands

580+, 500–579 and below 500 are different paths.

580 or higher

HUD permits maximum financing: up to 96.5% LTV, with at least 3.5% minimum required investment, when all other requirements are met.

500–579

HUD limits financing to 90% LTV, typically requiring at least 10% down. This is not the 3.5% down band.

Below 500

A Minimum Decision Credit Score below 500 is not eligible for FHA-insured financing under HUD Handbook 4000.1. Compensating factors do not erase that rule.

Source: HUD Handbook 4000.1, Minimum Decision Credit Score. Lender overlays can be stricter.

Beyond the Down Payment

Gifts, mortgage insurance and the rest of the file.

The figures below describe public FHA rules. Lender requirements may be stricter, and Texana reviews the specific file before determining eligibility.

Which credit score counts?

HUD uses the Minimum Decision Credit Score (MDCS). With three scores, that is the middle score; with two differing scores, it is the lower. With multiple borrowers, the lowest borrower MDCS controls. No usable traditional score is a separate non-traditional-credit/manual-underwriting path that may permit maximum financing; it is not the same as having a score below 500.

HUD Handbook 4000.1 — current published handbook, August 12, 2026

Can gifts cover the down payment?

Eligible gifts can cover the minimum required investment when documented. Acceptable donors include family, an employer or labor union, a close friend with a documented interest in the borrower, a charity, or a qualifying government/public assistance program. The gift must require no repayment. A gift letter and evidence of the transfer are required; cash on hand is not an acceptable source of donor gift funds.

HUD Handbook 4000.1 — current published handbook, August 12, 2026

What can the seller pay?

Interested parties may contribute up to 6% of the sales price toward allowable closing costs, prepaid expenses and discount points. Those contributions cannot fund the borrower’s minimum required investment. Contributions above the limit are treated as inducements to purchase. Assistance programs have their own income, location and other eligibility rules; there is no universal national grant amount.

HUD Handbook 4000.1 — current published handbook, August 12, 2026

What does FHA mortgage insurance cost?

For most FHA forward mortgages, upfront MIP is 1.75% of the base loan amount. The annual premium varies by LTV, term and base-loan band; 0.55% is a common band for loans longer than 15 years with more than 95% LTV in the lower base-loan tier. These are mortgage-insurance premiums, not interest rates or a quote for your loan.

HUD Mortgagee Letter 2023-05 — mortgage insurance premiums, February 22, 2023

How long does annual MIP last?

For case numbers assigned on or after June 3, 2013, original LTV above 90% generally means annual MIP for the mortgage term. At 90% LTV or below, the published duration is 11 years. A typical 3.5% down purchase falls in the loan-term category. Putting 10% or more down often falls in the 11-year category. Conventional PMI cancellation rules are different.

HUD — annual MIP duration by original LTV and term

Who does mortgage insurance protect?

Mortgage insurance protects the lender if the borrower defaults. FHA has upfront and monthly insurance costs. Financing the upfront premium may reduce immediate cash needed, but increases the loan amount and overall borrowing cost.

CFPB — mortgage insurance, reviewed August 28, 2026

What is the 2026 FHA loan limit?

For case numbers assigned on or after January 1, 2026, the one-unit floor is $541,287 and the standard high-cost ceiling is $1,249,125. Multi-unit limits are higher, and HUD publishes special exceptions for certain areas. Check the county and unit count in HUD’s lookup. A loan limit does not establish the amount you personally qualify to borrow.

HUD Mortgagee Letter 2025-23 — 2026 FHA loan limits, December 11, 2025

Does a qualification check affect credit?

CFPB explains that soft inquiries generally do not affect scores, while hard inquiries can. Texana’s FHA page describes a soft inquiry for initial rate checks and pre-qualification. Ask which type will be used before a credit pull; a later formal application can involve a hard inquiry. A soft inquiry is not loan approval.

CFPB — credit inquiries, reviewed September 5, 2025

Look up your county’s FHA loan limit · Texana’s FHA product and pre-qualification process

Compare Your Next Question

Which guide fits what you need?

Frequently Asked Questions

Questions to Bring to Your Review

Sources and Next Steps

Check the rules. Then review your file.

Sources checked September 29, 2026. HUD’s current Handbook 4000.1 and applicable Mortgagee Letters govern FHA policy. CFPB explains credit inquiries and mortgage insurance; Texana’s product page describes its own initial pre-qualification process.

Ready to explore your FHA path? Use Check Your Eligibility or call (888) 272-8264. Confirm the inquiry type before a credit pull.

This page is education, not a commitment to lend. All loans are subject to credit approval and underwriting. Equal Housing Lender. NMLS #407536.

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What borrowers say about Texana Bank

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