What Is an FHA Loan?
An FHA loan is a government-insured mortgage backed by the Federal Housing Administration, designed to expand homeownership access for borrowers with lower credit scores or smaller down payments. FHA loans allow as little as 3.5% down with a 580+ credit score (10% down with 500-579), accept higher debt-to-income ratios than conventional loans, and offer competitive interest rates regardless of credit tier. The trade-off: FHA loans require both an upfront and an annual mortgage insurance premium that lasts for the life of the loan in most cases.
Key Facts
FHA Down Payment & Credit Requirements
The FHA's signature feature is the 3.5% minimum down payment for borrowers with credit scores of 580 or above. Borrowers with scores between 500 and 579 can still qualify but must put 10% down. The entire down payment can come from a gift from family — making FHA the default choice for first-time buyers who have credit and income but lack liquid savings. Even though HUD's official minimum is 580, most lenders set their own overlay at 620 or 640 for the 3.5% program, so check with your lender before assuming.
Understanding FHA Mortgage Insurance (MIP)
Every FHA loan carries two mortgage insurance premiums. The Upfront MIP is 1.75% of the loan amount and is added to the loan balance at closing — you don't pay it out of pocket, but you do pay interest on it for the life of the loan. The Annual MIP is paid monthly as part of your mortgage payment and ranges from 0.55% to 0.85% depending on loan term and LTV. Critically: on most FHA loans originated after June 2013, the annual MIP cannot be canceled — it lasts the entire life of the loan, even if you build significant equity. The only way to remove it is to refinance into a conventional loan.
FHA vs. Conventional: When to Choose Each
FHA wins when your credit score is 580-680 — the rate gap on conventional loans at those credit tiers is significant, and FHA's flat pricing structure means you get the same rate as a 740-credit borrower. Conventional wins when your credit score is 720+ and you can put 5-10% down — you'll pay PMI, but PMI cancels at 80% LTV (FHA MIP doesn't). FHA also wins on DTI: it allows DTI up to 56.9% with compensating factors, while conventional caps at 50% on most programs.
FHA Loan Limits in Oregon and California (2026)
FHA loan limits vary by county. In 2026, the baseline FHA limit for a single-family home is $524,225 in low-cost counties, and as high as $1,209,750 in high-cost counties. In Oregon, most counties (including Lane County and Jackson County) sit at or near the baseline; Multnomah, Washington, and Clackamas counties have higher limits in the $700K range. In California, Orange County, Ventura, and Bay Area counties are at the maximum $1,209,750. Sacramento County sits in the middle. Always verify the current limit for your specific county before assuming FHA will work for your purchase price.
FHA Property Eligibility & Inspection Standards
FHA loans can only finance primary residences (no second homes or investment properties) and are limited to 1-4 unit properties. The property must meet FHA's Minimum Property Standards — habitability, safety, and structural soundness — verified by an FHA-approved appraiser. Properties with peeling paint (lead concern in pre-1978 homes), missing handrails, broken windows, or active leaks will require repairs before closing. This is why FHA offers fall apart on homes sold 'as-is' that need significant rehab — though the FHA 203(k) program is specifically designed to finance the purchase plus the renovation in one loan.
Realtor Referral
FHA offers get rejected when realtors don't know the program.
Sellers and listing agents reject perfectly good FHA offers because they assume property condition or appraisal will be an issue. The fix is a buyer's agent who knows how to write and defend an FHA offer. We can introduce you to OR/CA realtors who've closed our FHA deals.
No directory. No paid placements. No RESPA-restricted referral fees. We've worked alongside these pros on real Oregon and California deals — we'll make a personal email introduction so you can interview them yourself.
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From the Blog
Further Reading
Loan TypesFHA vs. Conventional Loans: Which Is Right for You?
These two loan types cover the majority of home purchases in the U.S. — but they work very differently. Here's a side-by-side breakdown to help you make the right call.
First-Time BuyersWhat Credit Score Do You Need to Buy a Home in 2026?
Your credit score is one of the first things lenders look at — but the minimum varies by loan type. Here's a clear breakdown of what's required and how to improve your score before you apply.