Educational information; not financial advice or a pre-approval. Subject to qualification: terms and funding can change and your lender confirms them. Berenice Cruz is a North Carolina real estate broker and does not originate loans.
Who it’s for
Buyers usually look at FHA when savings for a down payment are thin or credit history has a few bumps. HUD says the down payment can be as low as 3.5%. The credit rule HUD laid out in Mortgagee Letter 2010-29 is still the benchmark: 580 or higher qualifies for maximum financing; 500 to 579 is limited to 90% of value, meaning 10% down; below 500 isn't eligible. Individual lenders can apply their own standards, so check with yours.
What sets FHA apart on cost is mortgage insurance (MIP): an upfront premium plus an annual premium that depends on how much you borrow. Weigh it against other options before you commit.
Requirements and sources
| Minimum down payment | As low as 3.5% of the purchase priceHUD — Loans · Undated page; checked Oct 8, 2026 |
|---|---|
| Credit 580 and up | Eligible for maximum financingHUD Mortgagee Letter 2010-29 · Sept 3, 2010 |
| Credit 500–579 | Limited to 90% LTV (10% down); below 500 not eligibleHUD Mortgagee Letter 2010-29 · Sept 3, 2010 |
| Upfront MIP | 1.75% of the base loan amountHUD Mortgagee Letter 2023-05 · Case numbers on or after Mar 20, 2023 |
| Annual MIP (terms over 15 years) | 0.55% above 95% LTV; 0.50% at 95% or below (11 years if 90% or below)HUD Mortgagee Letter 2023-05 · Case numbers on or after Mar 20, 2023 |
| Residency | U.S. citizens, lawful permanent residents, and citizens of FSM, the Marshall Islands and PalauHUD Mortgagee Letter 2025-09 · Case numbers on or after May 25, 2025 |
| Gift funds | Allowed from relatives, employer, documented close friend, charity or public program; not from seller or agentHUD Handbook 4155.1, 5.B.4 · Jan 31, 2011 (since superseded by 4000.1) |
| 2026 loan limit | National one-unit floor of $541,287; your county's limit is confirmed by your lenderHUD Mortgagee Letter 2025-23 · Case numbers on or after Jan 1, 2026 |
How it combines with other programs
An FHA loan can be the first mortgage inside NCHFA's NC Home Advantage Mortgage™. Going that route, qualified buyers can tap that mortgage's assistance or the $15,000 NC 1st Home Advantage, subject to qualification. HUD lists public down payment assistance programs as an acceptable source of funds.
Inside Charlotte city limits, HouseCharlotte is another piece to look at. A participating lender confirms which combination works for you. Terms and funding can change; your lender confirms them.
Steps to apply
- Make sure your status meets HUD's current residency rule.
- Check your credit score and line up at least 3.5%, whether from savings, a gift or an assistance program.
- Ask a lender for an FHA prequalification alongside other options, MIP cost included.
- Ask for your county's FHA loan limit before you set a budget.
- If a gift is involved, document it with your lender from day one.
The May 2025 residency rule
In Mortgagee Letter 2025-09, dated March 26, 2025, HUD eliminated eligibility for non-permanent resident borrowers. It applies to FHA case numbers assigned on or after May 25, 2025. Today, eligible borrowers are U.S. citizens, lawful permanent residents, and citizens of the Federated States of Micronesia, the Marshall Islands and Palau. If you file taxes with an ITIN or hold another status, see our ITIN mortgage guide.
Frequently asked questions
How much do I need down for an FHA loan?
HUD says it can be as low as 3.5% of the purchase price with a 580 score or higher. With a score from 500 to 579, Mortgagee Letter 2010-29 limits the loan to 90% of value, which works out to 10% down. On top of the down payment, plan for closing costs.
What is MIP and what does it cost?
It's FHA's mortgage insurance. Under Mortgagee Letter 2023-05, the upfront premium is 1.75% of the base loan, and the annual premium on terms over 15 years runs 0.50% to 0.55% depending on how much you finance. Borrow more than 90% of value and the annual premium stays for the life of the loan.
Can a relative give me the down payment?
Yes. The HUD guidance we reviewed (Handbook 4155.1, since superseded by 4000.1) allows gifts from a relative, an employer or union, a close friend with a documented interest, a charity, or a public assistance program. Sellers, agents and builders can't provide gift funds, and nobody can expect the gift to be paid back. Your lender confirms the current rule.
Can I get an FHA loan on a work permit or visa?
Not since May 25, 2025. Mortgagee Letter 2025-09 ended eligibility for non-permanent residents. U.S. citizens, lawful permanent residents and citizens of Micronesia, the Marshall Islands and Palau still qualify. If that leaves you out, our ITIN guide covers private-market options, subject to qualification.
Do I have to be a first-time buyer for FHA?
The HUD sources we reviewed don't set that condition for an FHA loan. What you do need to meet is credit, income, residency status and your county's loan limit. If you pair FHA with NC 1st Home Advantage, though, NCHFA's first-time rule and its exceptions come into play.
Related programs
- NC Home Advantage Mortgage™
- NC 1st Home Advantage Down Payment
- USDA loan
- VA loan
- ITIN mortgages
- HouseCharlotte
- Compare all
- Complete home-buying guide
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