FHA is the loan most first-time buyers in Florida end up using. The Federal Housing Administration doesn't lend the money itself. It insures the loan, and that insurance lets lenders approve lower credit scores, smaller down payments and higher debt ratios than almost any other program.
The FHA rules in one table
| Requirement | The FHA rule |
|---|---|
| Credit score | 580 or higher for 3.5% down; 500 to 579 with 10% down |
| Down payment | 3.5% or 10%, and all of it can be a gift |
| Debt-to-income | About 46.9% housing and 56.9% total with an automated approval |
| Mortgage insurance | 1.75% upfront, plus 0.55% a year at 3.5% down |
| Loan size | Up to your county's FHA limit ($541,287 to $1,249,125 for one unit in 2026) |
| Seller help | Up to 6% of the price toward your costs |
| Property | 1 to 4 units, and you live in it |
| Residency | U.S. citizen or lawful permanent resident |
| Waiting periods | 2 years after a Chapter 7, 3 years after a foreclosure |
Credit score: the 500 and 580 tiers
FHA draws two lines. At 580 or higher you're eligible for maximum financing, which is 96.5% of the price, so you put 3.5% down. From 500 to 579 the maximum loan-to-value (LTV, the loan amount divided by the price or appraised value, whichever is lower) is 90%, so you put 10% down. Below 500, FHA won't insure the loan.
The score the lender uses is the middle of your three bureau scores, or the lower one if only two come back. When two people buy together, the lower of the two borrowers' scores is the one that counts. FHA is adding VantageScore 4.0 and FICO Score 10T next to Classic FICO, and HUD's Mortgagee Letter on the change states plainly that the 500 and 580 thresholds stay the same no matter which model is used.
Plenty of lenders set their own floor at 580 or 620 even though FHA goes to 500. AAA Capital Funding approves FHA loans down to 500 and shops several wholesale lenders to place each one.
Down payment and where it can come from
FHA calls the down payment the minimum required investment, and it's 3.5% of the price at 580 and up. On a $350,000 home that's $12,250. At 10% down it's $35,000.
Every dollar of it can be a gift. FHA accepts gifts from a family member, your employer or labor union, a close friend with a clearly documented relationship, a charitable organization, or a government agency running a homebuyer program. The seller, the real estate agents, the builder and anyone else with a financial stake in the sale can't give you the down payment. The lender documents a gift with a signed gift letter and a paper trail showing the money moving from the donor to you or to the closing agent.
If you'd rather not wait to save even the 3.5%, read the guide to FHA 100% financing. It pairs a 96.5% FHA first mortgage with a down payment assistance second that covers the 3.5%, so you bring $0 for the down payment.
Debt-to-income limits
Debt-to-income (DTI) is your monthly debt payments divided by your gross monthly income. FHA looks at two versions. The housing ratio (front-end) is your new mortgage payment alone. The total ratio (back-end) adds every other monthly debt on your credit report: car loans, student loans, credit card minimums, personal loans and child support. Utilities, phone bills, car insurance and the rent you're leaving don't count.
The mortgage payment lenders use is PITI plus MIP: principal, interest, property taxes, homeowners insurance and the monthly mortgage insurance premium, plus HOA dues if the home has them.
FHA's automated underwriting system (AUS), called TOTAL Mortgage Scorecard, regularly approves borrowers up to about 46.9% housing and 56.9% total. Those are the limits QualRate's calculators use. When a loan has to be underwritten by hand instead, FHA starts at 31% housing and 43% total and allows up to 40% and 50% when the borrower has compensating factors such as cash reserves or very little payment increase over current rent.
Run your own numbers in the DTI calculator to see both ratios against every program's limit.
A $350,000 home with 3.5% down
Picture a Broward County purchase at the 5.75% 30-year fixed rate, using a property tax rate of about 0.95% and homeowners insurance of $283 a month.
- Price: $350,000
- Down payment (3.5%): $12,250
- Base loan (96.5%): $337,750
- Upfront MIP (1.75% of the base loan, added to the loan): $5,910.63
- Total loan: $343,660.63
| Monthly payment piece | Amount |
|---|---|
| Principal and interest | $2,005.51 |
| Annual MIP (0.55% of $337,750, divided by 12) | $154.80 |
| Property taxes | $277.08 |
| Homeowners insurance | $283.00 |
| Total housing payment | $2,720.39 |
To keep the housing ratio at 46.9%, the buyer needs gross income of at least $2,720.39 divided by 0.469, which is $5,800 a month, or about $69,600 a year. If the same buyer also has a $350 car payment and $150 in card minimums, total debts come to $3,220.39, which is 55.5% of $5,800. That's inside the 56.9% limit, so this buyer qualifies at this price.
Now say the buyer's score is 560. The down payment moves to 10%, or $35,000, the base loan drops to $315,000 and annual MIP falls to 0.50% because the LTV is 90%. The total payment comes to $2,561.75, about $159 less, and the MIP ends after 11 years instead of lasting the life of the loan.
To run any address and price, use the price check tool.
If those numbers come up a little short, the first fix is usually a co-signer. A parent or grandparent can co-sign even if their income is Social Security or SSI, and FHA lets the lender gross up non-taxable income like SSI by 15%. A co-signer doesn't go on the title and doesn't have to live in the home. Call AAA Capital Funding at 888-601-8344 and we'll put your income, debts and price together with you.
FHA mortgage insurance (MIP)
Every FHA loan carries two mortgage insurance charges.
Upfront MIP is 1.75% of the base loan amount. Almost everyone finances it into the loan, so it doesn't come out of your pocket at closing.
Annual MIP is billed monthly with your payment. For a 30-year loan with a base amount at or under $726,200, it's 0.55% a year when you put down less than 5% and 0.50% when you put down 5% or more. Base loans above $726,200 pay 0.75% and 0.70%. How long it lasts depends on your down payment:
| Down payment | Annual MIP rate | How long it lasts |
|---|---|---|
| 3.5% to under 5% | 0.55% | Life of the loan |
| 5% to under 10% | 0.50% | Life of the loan |
| 10% or more | 0.50% | 11 years |
The annual premium only drops off early when you refinance or sell. Owners who put 3.5% down usually refinance into a Conventional loan once they hold about 20% equity.
FHA loan limits
FHA caps the base loan amount by county. In the lowest-cost areas the 2026 limit for a single-family home is $541,287, and in the highest-cost areas it reaches $1,249,125. Broward, Miami-Dade and Palm Beach all sit above the floor. The upfront MIP can be financed on top of the limit, so a buyer at the county maximum still rolls in the 1.75%.
| Units | Lowest-cost areas | Highest-cost areas |
|---|---|---|
| 1 unit | $541,287 | $1,249,125 |
| 2 units | $693,050 | $1,599,375 |
| 3 units | $837,700 | $1,933,200 |
| 4 units | $1,041,125 | $2,402,625 |
Look up any Florida county with the loan limits tool.
Seller concessions and closing costs
The down payment isn't the only cash on the table. Closing costs, prepaid insurance and the tax escrow deposit add up, and FHA lets the seller, builder or agents pay up to 6% of the price toward them. On a $350,000 home that's up to $21,000, which usually covers all of a typical buyer's closing costs and prepaids. Those credits can pay closing costs, prepaid items, discount points and the upfront MIP. They can't cover the 3.5% down payment.
When the seller pays your buyer's agent commission as a matter of local custom and the amount is reasonable, HUD doesn't count it against the 6%.
Property and occupancy rules
The home has to be your primary residence. At least one borrower must move in within 60 days of closing and plan to live there for at least a year. FHA covers buildings with 1 to 4 units, so you can buy a duplex, triplex or fourplex, live in one unit and rent out the rest. The house hacking guide walks through how rent from the other units helps you qualify.
The home also gets an FHA appraisal, which checks the value and confirms the property meets HUD's minimum standards for safety and soundness.
Residency and work history
FHA is open to U.S. citizens, lawful permanent residents (green card holders) and citizens of the Federated States of Micronesia, the Republic of the Marshall Islands and the Republic of Palau. A permanent resident shows the green card to document status, since a Social Security card alone doesn't establish it.
The lender verifies two years of employment history. Gaps, job changes and new graduates are all workable with the right documents, and self-employed buyers qualify on two years of tax returns.
Waiting periods after bankruptcy and foreclosure
| Event | FHA waiting period |
|---|---|
| Chapter 7 bankruptcy | 2 years from the discharge date |
| Chapter 13 bankruptcy | 12 months of on-time plan payments plus written approval from the bankruptcy court |
| Foreclosure | 3 years from when the foreclosure was completed |
| Deed in lieu of foreclosure | 3 years from the transfer date |
| Short sale | 3 years, or none if you were current on the mortgage for the 12 months before the sale |
HUD allows a shorter wait in documented extenuating circumstances, such as the death of a primary wage earner or a serious illness, as long as the borrower has reestablished good credit since.
AAA Capital Funding has closed FHA loans in Florida since 1997, and the rules on this page cross our desk every day. Call 888-601-8344 and we'll go over your numbers with you.