FHA-Insured Mortgage Program
FHA Loans — 3.5% down, flexible credit, predictable fit.
Federal Housing Administration-insured. Great for first-time buyers and credit rebuilders.
At a glance
What makes an FHA loan different
Down payment
3.5%
3.5% down with FICO 580+. 10% down with FICO 500–579.
Max LTV
96.5%
Up to 96.5% loan-to-value on a primary purchase.
Min credit (most investors)
580
Investors can go to 500 with 10% down. Some add overlays.
Upfront MIP
1.75%
One-time, financed into the loan. Annual MIP also applies.
How it works
The FHA loan in plain English
FHA is insurance, not lending. The Federal Housing Administration insures the loan so the actual lender (Alliance’s investor pool) can accept a 3.5% down payment and FICO scores as low as 580. In exchange for that insurance, you pay two mortgage insurance premiums: an upfront premium (UFMIP) of 1.75% rolled into the loan at closing, and an annual premium (MIP) split into 12 monthly pieces added to your payment.
FHA is aimed squarely at first-time buyers, credit rebuilders, and borrowers with non-traditional income histories. DTI ratios as high as 56.99% can be approved with compensating factors (reserves, residual income, consistent housing payment history). The program also allows 100% of the down payment and closing costs to come from a documented gift — no seasoning requirement on gift funds if sourced correctly.
The honest tradeoff is MIP duration. If you put less than 10% down (the typical 3.5% case), MIP sticks for the life of the loan and the only way off is to refinance into a conventional loan once you cross 20% equity. At 10%+ down, MIP auto-terminates after 132 months. For a 3.5%-down borrower with improving credit, Alliance models an FHA-to-conv refi on a 5–7-year horizon rather than assuming FHA forever.
FHA appraisals enforce Minimum Property Standards — chipping paint on pre-1978 homes, exposed wiring, and roofs with short remaining life will require repairs before closing. FHA also requires the property be owner-occupied within 60 days and for at least one year. Investment properties and second homes do not work on FHA.
FHA loan limits are set by county. The 2026 floor (applies to most counties) is $524,225 for a 1-unit home; high-cost markets run up to $1,209,750. Multi-unit (2–4) limits are higher, which opens up the "house-hack" play: buy a duplex with 3.5% down, live in one unit, rent the other.
The numbers
FHA parameters — 2026
Minimum down payment — FICO 580+
3.5%
Minimum down payment — FICO 500–579
10%
Upfront Mortgage Insurance Premium (UFMIP)
1.75%
Annual MIP — 30-yr, ≥5% down, ≤$726,200
0.50%
Annual MIP — 30-yr, <5% down, ≤$726,200
0.55%
MIP duration — LTV >90% at origination
Life of loan
MIP duration — LTV ≤90% at origination
132 months (11 yrs)
Max debt-to-income with compensating factors
56.99%
2026 FHA loan limit — most counties (1-unit)
$524,225
Annual MIP tiers above are the most common scenario (30-year term, loan ≤$726,200). High-balance and 15-year loans have different grids. Alliance quotes your exact MIP tier during pre-approval.
Next step
Start the numbers or start the file
Get pre-qualified
Short form. Soft credit pull. Alliance returns your FHA eligibility, county loan limit, and rate range within one business day.
Start application →
Run the numbers
See the full FHA PITI including UFMIP-in and monthly MIP. Compare to a conventional 5%-down scenario side-by-side.
Open calculator →
FAQ
What first-time buyers actually ask us
Can I really get an FHA loan with a 580 credit score?
Yes. FHA's floor is 500 (with 10% down) and 580 (with 3.5% down). Most investors who buy FHA paper want 580+, and a handful will work on 500–579 with 10% down. Credit score drives rate, not just approval — Alliance shops across FHA-approved investors so a 600 borrower sees a rate menu, not just a yes/no.
How much is FHA mortgage insurance, really?
Two pieces. Upfront MIP is 1.75% of the loan amount, paid at closing (usually financed in). Annual MIP runs 0.50%–0.55% on a 30-year, divided by 12, added to your monthly payment. On a $400,000 FHA loan with 3.5% down, that is $7,000 UFMIP financed in, plus about $177/month in annual MIP.
Does FHA MIP ever go away?
Only under one scenario. If you put at least 10% down (LTV ≤ 90% at origination), MIP auto-removes after 132 months (11 years). If you put less than 10% down, MIP stays for the life of the loan — the only way out is to refinance into a conventional loan once you reach 20% equity. That refi path is why Alliance models conv-after-FHA on a 5–7-year horizon for 3.5%-down borrowers.
What are 2026 FHA loan limits in Texas, Florida, Georgia, Maryland, and Pennsylvania?
FHA sets limits county-by-county. The 2026 floor (most rural and standard-cost counties) is $524,225 for a 1-unit home. High-cost counties run up to $1,209,750. Use Alliance's pre-approval — we pull the exact limit for the county you are buying in before we write you a letter.
Can I use FHA for a condo or a 2–4 unit property?
Yes on both. Condos must be on the FHA-approved project list (or go through single-unit approval, which Alliance can run). 2–4 unit properties work with FHA if you owner-occupy one unit — this is the "house-hack" play: 3.5% down on a duplex, rent the other side. Loan limits are higher on multi-unit. Rental income from the non-occupied units can count toward qualifying.
Should I take an FHA loan or a 3%-down conventional?
It depends on credit. At 720+ FICO, conventional PMI is typically cheaper than FHA MIP and cancels at 80% LTV — conventional wins. At 620–680 FICO, FHA often prices better and has looser DTI rules. Alliance quotes both and shows you the 5-year total cost side-by-side so the choice is a number, not a guess.
Ready to start?
Apply in minutes through our secure application portal, or schedule a call with our team.