Mortgage Navigator • Loan Programs • Updated September 2026

FHA loans: the complete guide most “FHA loan” pages leave out.

FHA is not simply “3.5% down for first-time buyers.” It is a family of HUD-insured mortgage programs with rules for credit, income, self-employment, gifts, 2–4 unit homes, condos, manufactured housing, refinances, disaster victims, Native lands, Hawaiian Home Lands, adjustable-rate loans and more.

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FHA basics Credit Income Self-employed Funds to close DTI Property types Mortgage insurance 2026 limits Special FHA programs Refinance Native/tribal programs Myth checks

3.5% downMaximum financing is generally available when the Minimum Decision Credit Score is 580 or higher.

500–579FHA policy can permit financing at up to 90% LTV, subject to lender approval and overlays.

1–4 unitsThe standard 203(b) program can finance an owner-occupied one- through four-unit principal residence.

Not first-time onlyFHA does not generally require a borrower to be a first-time buyer.

1. What an FHA loan actually is

The basic FHA forward mortgage is commonly called Section 203(b). A private lender makes the loan and FHA insures the lender against certain losses. The borrower must generally occupy the property as a principal residence. Eligible properties can include one- to four-unit homes, qualifying condominiums, and qualifying manufactured homes.

FHA can be useful when a buyer has a smaller down payment, a more complicated credit profile, higher debt ratios than some conventional executions tolerate, gift funds, a non-occupying co-borrower, or a property/borrower scenario where FHA's published handbook provides flexibility.

Important: FHA guidelines are not the same as a lender's overlays. HUD may permit something that a particular lender chooses not to offer.

2. Credit scores, credit history and what “minimum FHA score” really means

FHA's handbook uses the Minimum Decision Credit Score (MDCS). Maximum financing is generally tied to an MDCS of at least 580. Scores from 500–579 can be eligible under FHA policy at a maximum 90% LTV, but many lenders impose higher minimums.

Credit issues FHA can evaluate

Traditional credit and limited/no traditional credit.
Collections and charge-offs under FHA's specific treatment rules.
Student loans, including the current rule for a reported $0 payment.
Chapter 7 and Chapter 13 bankruptcy, foreclosure, deed-in-lieu and short-sale seasoning, with certain documented exceptions.
Disputed accounts, judgments, federal debt and delinquent federal taxes under their respective rules.

Why this matters: “FHA allows a 580” does not mean every 580 borrower is approvable. AUS findings, payment history, reserves, debt ratio, derogatory events and lender overlays still matter.

3. Income: FHA is broader than just W-2 wages

FHA permits many forms of effective income when they meet the handbook's history, continuance, stability and documentation requirements. Depending on the scenario, that can include:

Income type	What FHA cares about
Salary / hourly	Current earnings, employment history and likelihood of continuance.
Overtime / bonus / tips	History, trend and whether the income is likely to continue.
Commission	History, stability and documentation under FHA's commission-income rules.
Self-employment	Business history, tax-return analysis, stability, trend and current business performance.
Rental income	Lease/appraisal/tax-return treatment depends on whether the property is departing, retained or being purchased.
ADU income	FHA permits qualifying treatment for certain actual or projected accessory dwelling unit rental income.
Social Security / pension / disability	Documentation and continuance; certain non-taxable income may receive a gross-up when permitted.
Alimony / child support	Receipt history and continuance rules apply when the borrower chooses to use it.
Part-time / second job	History and stability are analyzed separately from primary employment.
Boarder income / other sources	Only where FHA specifically permits and documentation standards are met.

4. Self-employed borrowers — and the “FHA P&L-only” question

FHA defines self-employment income generally as income from a business in which the borrower has a 25% or greater ownership interest. FHA evaluates the length of self-employment, stability of income, trends and the business's ability to support the income used to qualify.

Current FHA handbook policy generally uses tax-return-based analysis for self-employed income and may require a year-to-date profit-and-loss statement and balance sheet depending on timing and circumstances. A Schedule C borrower does not always need a separate balance sheet.

Mortgage Navigator myth check: there is not a HUD-published “FHA P&L-only alt-doc loan program” in Handbook 4000.1 that simply replaces tax returns with a P&L because write-offs are too high. Some lenders advertise products using phrases like “FHA P&L only,” but that label should not be confused with standard FHA-insured self-employment underwriting. If a product truly qualifies income only from an unaudited P&L without FHA's tax-return rules, it needs to be identified and documented as a separate lender/non-agency product rather than represented as a standard FHA program.

What we will eventually build as a dedicated Self-Employed FHA page

Sole proprietor / Schedule C analysis
S-corp and corporation income
Partnership / K-1 income
Depreciation and permitted add-backs
Business-use-of-home, depletion and other adjustments
Business liquidity and business funds used for closing
Declining income and the greater-than-20% decline rule
When one year of tax returns may be sufficient under the handbook
YTD P&L and balance-sheet documentation

5. Down payment, gifts, seller help and funds to close

The standard FHA minimum required investment for maximum financing is generally 3.5%. FHA permits a wide range of acceptable sources when properly documented, including the borrower's own funds and eligible gift funds. Down payment assistance can also be used when the provider and subordinate financing meet FHA requirements.

Interested parties such as a seller, builder, developer or real estate agent may generally contribute up to 6% of the sales price toward eligible closing costs, prepaid items, discount points and other permitted items. Seller contributions are not the same thing as the buyer's minimum required investment.

FHA also has detailed rules for earnest money, large deposits, cash on hand in limited circumstances, retirement accounts, stocks/bonds, sale of personal property, secured loans and gifts of equity.

6. Debt-to-income ratios: AUS versus manual underwriting

There is no single universal “FHA max DTI” that describes every automated approval. FHA's TOTAL Mortgage Scorecard can approve borrowers above traditional manual ratios depending on the full risk profile.

For manual underwriting, FHA publishes ratio matrices. Borrowers with a score of 580+ can move from the basic 31/43 framework to higher ratios when specific compensating factors are documented. The manual matrix can reach 40/50 with the required compensating factors. Borrowers with 500–579 or no credit score are generally capped at 31/43, with the handbook's energy-efficient-home stretch treatment where applicable.

7. What can you buy with FHA?

One-unit homes

Detached, attached and other eligible one-unit principal residences that meet FHA property requirements.

2–4 unit properties

FHA can finance an owner-occupied duplex, triplex or fourplex. Rental income treatment, reserves and the FHA self-sufficiency test for three- and four-unit properties can become important.

Condominiums

FHA can insure units in FHA-approved condominium projects and, when the project is not approved, may permit a qualifying Single-Unit Approval.

Manufactured homes

FHA has more than one manufactured-housing path. Title II can insure qualifying manufactured homes treated as real estate under the applicable FHA requirements. Title I is a separate FHA-insured loan program that can finance a manufactured home unit, a lot, or a home-and-lot combination and can allow a qualifying home on a leased lot.

New construction

FHA can finance eligible new construction. The file may require builder/new-construction documentation and property standards that differ from an existing home.

ADUs

A one-unit property can include an accessory dwelling unit, and FHA policy permits some actual or projected ADU rental income to be used for qualifying when requirements are met.

203(k) is intentionally not covered on this page. We will put FHA Standard and Limited 203(k) in the separate Renovation Loan section of Mortgage Navigator.

8. FHA mortgage insurance (MIP)

For most FHA forward mortgages, the upfront mortgage insurance premium is currently 1.75% of the base loan amount and can generally be financed. Annual MIP is collected monthly and varies by term, base loan amount and LTV.

Common 30-year scenario	Current annual MIP
Base loan ≤ $726,200 and LTV above 95%	0.55%
Base loan ≤ $726,200 and LTV at or below 95%	0.50%
Base loan above $726,200	Higher annual MIP tiers apply depending on LTV

MIP cancellation duration depends on original LTV and loan term. FHA also has special premium treatment for certain older streamline/simple refinances. Sections 247 and 248 and Title I have different premium structures.

9. FHA loan limits for 2026

For case numbers assigned in 2026, FHA's nationwide forward-mortgage limits are:

Units	Low-cost floor	High-cost ceiling
1	$541,287	$1,249,125
2	$693,050	$1,599,375
3	$837,700	$1,933,200
4	$1,041,125	$2,402,625

Actual limits are county/MSA specific. Alaska, Hawaii, Guam and the U.S. Virgin Islands can have higher special-exception limits.

10. FHA programs and special executions beyond a plain 203(b)

Program	What it does	What to know
203(b)	Basic purchase/refinance mortgage insurance for principal residences.	The core FHA forward program.
Section 251 ARM	FHA-insured adjustable-rate mortgage.	FHA permits 1-, 3-, 5-, 7- and 10-year initial fixed periods, with program caps.
Section 245(a) GPM / GEM	Graduated Payment Mortgage and Growing Equity Mortgage structures.	Special payment structures; far less common than level-payment FHA loans and lender availability can be limited.
203(h) Disaster Victims	Helps eligible victims in presidentially declared major disaster areas replace or rebuild a principal residence.	Special eligibility and timing rules apply.
Energy Efficient Mortgage (EEM)	Allows qualifying energy-efficiency improvements to be financed with an FHA mortgage under the EEM rules.	Energy package and qualifying rules apply.
Section 247 Hawaiian Home Lands	FHA mortgage insurance for eligible Native Hawaiians on Hawaiian Home Lands.	Fundamentally based on 203(b), but with special land/lease and eligibility rules; annual MIP is not required.
Section 248 Indian Lands	FHA mortgage insurance for eligible homes on Indian reservations and other restricted lands.	Requires tribal participation and an FHA-approved lease framework.
Section 223(e)	Special FHA insurance authority for certain properties in older/declining urban areas where location might otherwise impair acceptability.	Niche program; lender and property eligibility must be verified.
Condominium / Single-Unit Approval	FHA financing for units in approved projects or qualifying individual units.	Project and unit eligibility matter in addition to borrower approval.
Title I Manufactured Home	FHA-insured financing for a manufactured home, lot, or combination.	Can include homes on qualifying leased lots; structurally different from Title II.
Title I Property Improvement	FHA-insured property-improvement financing.	Separate Title I program; not the same as 203(k).
HECM	FHA's Home Equity Conversion Mortgage for eligible homeowners age 62+.	Reverse-mortgage program with its own financial assessment, counseling and MIP rules.

11. FHA refinance options

Streamline refinance

Designed for an existing FHA-insured mortgage. It has its own seasoning, payment-history and net-tangible-benefit requirements and can be done with or without an appraisal depending on the execution.

Simple refinance

Refinances an existing FHA-insured mortgage with new credit qualification and an appraisal under the applicable FHA rules.

Rate-and-term refinance

Can refinance existing liens and eligible costs under FHA's rate-and-term framework.

Cash-out refinance

Allows eligible equity extraction, subject to FHA occupancy, seasoning, credit and maximum-LTV requirements.

Future Mortgage Navigator build: each refinance type should have its own page because the seasoning, payoff, appraisal, occupancy and maximum-mortgage calculations are different.

12. Native American and Native Hawaiian options: do not confuse 248 with 184

This is an area where mortgage websites routinely blur different HUD programs.

FHA Section 248

This is an FHA mortgage-insurance program. It is for eligible financing on Indian reservations and other restricted lands and is fundamentally similar to 203(b), with special tribal participation and lease requirements.

HUD Section 184 Indian Home Loan Guarantee

Section 184 is a HUD Office of Native American Programs loan guarantee — it is not FHA Section 248 and should not be marketed as an FHA loan. It is available to eligible American Indian and Alaska Native borrowers in approved areas. HUD currently advertises low down payments, manual underwriting, a 1% upfront guarantee fee and no annual guarantee fee for loans closed on or after July 1, 2023. It can be used for purchase, new construction, rehabilitation and refinance.

HUD Section 184A

A separate HUD loan-guarantee program for eligible Native Hawaiian families on Hawaiian Home Lands.

Mortgage Navigator rule: these programs belong in the broader HUD/Native lending guide and can be cross-linked from FHA, but we will clearly label which are FHA-insured and which are HUD-guaranteed through a different office.

13. FHA myth checks

“FHA is only for first-time buyers.” False.
“You need 20% down.” False; maximum financing is commonly 96.5% when FHA credit requirements are met.
“580 means guaranteed approval.” False; it is a policy threshold, not an approval.
“FHA has a hard 43% DTI cap.” False. TOTAL and manual underwriting operate differently.
“Seller can pay the down payment.” Not simply. Interested-party contributions and the borrower's minimum required investment are separate concepts.
“You cannot buy a duplex/triplex/fourplex FHA.” False, provided occupancy and other rules are satisfied.
“All condos must already be FHA approved.” False; qualifying Single-Unit Approval may be possible.
“FHA P&L-only lets self-employed buyers ignore tax returns.” Not as a standard HUD FHA program.
“Section 184 is just another FHA loan.” False; it is a separate HUD Native American loan-guarantee program.

Explore the FHA Mortgage Navigator

Start with the question closest to your situation. Each guide links back to the FHA hub and related policy topics.

Credit & underwriting

Scores, manual underwriting, collections, bankruptcy, foreclosure, debts and no-score borrowers.

Income & employment

W-2, variable income, self-employment, rental income, ADUs and other qualifying income.

Property & appraisal

Condition, value, condos, manufactured homes, flips, new construction, mixed use and wells.

Funds to close

3.5% MRI, gifts, seller contributions, DPA, assets, reserves and co-borrower structures.

Occupancy & eligibility

Principal residence, two FHA loans, military occupancy, title, trusts and unusual transactions.

FHA refinances

Streamline, Simple, Rate-and-Term, Cash-Out, seasoning, junior liens and borrower changes.

Special FHA/HUD programs

203(h), EEM, ARMs, 245(a), Native lending, Title I, HECM and other lesser-known programs.

Guideline gap audit

Assumptions, temporary buydowns, GNND, Building on Own Land, subsidy income and other overlooked rules.

14. Topics that deserve their own deep-dive FHA pages next

This hub is the program map. To make Mortgage Navigator genuinely useful for real scenarios, the next FHA pages should drill into:

FHA credit and derogatory-event waiting periods
FHA self-employed income calculations
FHA employment and variable-income rules
FHA rental income, departing residence and ADUs
FHA 2–4 unit financing and the 3–4 unit self-sufficiency test
FHA gift funds, DPA and seller contributions
FHA student loans, collections, judgments and disputed accounts
FHA non-occupying co-borrowers
FHA manufactured homes: Title II versus Title I
FHA condos and Single-Unit Approval
FHA appraisal / minimum property requirements
FHA Streamline, Simple, rate-and-term and cash-out refinance
FHA Section 203(h) disaster loans
FHA Sections 247 and 248, plus separate HUD Section 184 / 184A guides
FHA HECM reverse mortgages

FHA Credit & Underwriting Deep Dives

The FHA hub now connects to detailed underwriting guides:

FHA Credit & Underwriting — TOTAL vs manual, MDCS, DTI and compensating factors.
Bankruptcy, Foreclosure & Short Sale — waiting periods and exceptions.
Collections, Judgments & Disputes — including medical collections and downgrade triggers.
Student Loans & Debts — qualifying payment rules and liabilities.
No Credit Score / Non-Traditional Credit — FHA's manual path for borrowers without scored credit.

FHA Income & Employment Deep Dives

FHA Property & Appraisal Deep Dives

FHA Funds to Close & Transaction Deep Dives

FHA Occupancy, Eligibility & Special Transaction Deep Dives

FHA Refinance Deep Dives

FHA Special & Lesser-Known Program Deep Dives

Final FHA Gap-Audit Additions

Primary official sources used

HUD/FHA Single Family Housing Policy Handbook 4000.1 — current handbook information page; HUD published its latest update August 12, 2026.
HUD Single Family Mortgage Programs
HUD Section 203(b) Basic Home Mortgage Loan
HUD 2026 FHA Loan Limits
HUD FHA Mortgage Insurance Premium Structure
HUD FHA Condominium Mortgage Insurance
HUD FHA Title I Programs
HUD FHA Section 247 Hawaiian Home Lands
HUD FHA Section 248 Indian Lands
HUD Section 184 Indian Home Loan Guarantee Program

Educational content only. FHA policy, lender overlays, loan limits and program availability can change. Handbook 4000.1 and applicable Mortgagee Letters control over summaries on this page.

Reviewed by Joshua Dobson

MortgageDadOf3 • 21+ years mortgage experience • NMLS #190260

Josh created Mortgage Navigator to translate mortgage guidelines into practical answers for buyers, homeowners and real estate professionals.

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