FHA loans can offer a smaller down payment and more flexible credit guidelines than some conventional loans. We can help you compare the full cost, including mortgage insurance, for a Phoenix-area home.
3.5% down
FHA minimum for scores of 580 or higher. Lender requirements also apply.
500 FHA minimum
Lenders can require a higher score and full qualification.
May be allowed
Seller contributions depend on the costs and current FHA rules.
The Basics
An FHA loan is issued by an approved lender and insured by the Federal Housing Administration. FHA sets program rules, while the lender reviews your full application and the property.
FHA guidelines can allow a smaller down payment and more flexible credit review than some conventional loans. FHA mortgage insurance adds an upfront cost and an annual premium, so we compare the full payment and long-term cost before you choose.
An Honest Comparison
FHA and conventional loans fit different borrower profiles. Compare the down payment, credit rules, mortgage insurance, seller contributions, rate, and total cost for the options you qualify for.
| Feature | FHA | Conventional |
|---|---|---|
| Minimum down payment | 3.5% at 580 or higher; 10% at 500 to 579 under FHA guidelines. Lender rules apply. | Some programs allow 3%; eligibility and lender rules vary. |
| Credit score floor | FHA permits 500; lenders can require higher. | Varies by program and lender. |
| Mortgage insurance | Upfront and annual MIP. Annual MIP generally lasts 11 years or the loan term, based on original loan-to-value ratio. | PMI may apply below 20% down; cancellation follows the loan terms and federal rules. |
| Seller-paid closing costs | May be allowed for eligible costs, subject to FHA limits. | Limits vary by down payment, occupancy, and program. |
| May fit | Buyers with limited savings or lower credit scores. | Buyers who qualify for its pricing and mortgage-insurance terms. |
Five Key Advantages
FHA guidelines can reduce the cash and credit barriers to buying a home. Your lender still reviews the full application and property.
FHA guidelines allow a 3.5% minimum down payment with a credit score of 580 or higher. Scores from 500 to 579 require at least 10% down. Lenders can set higher requirements.
Gift funds may cover the required down payment when the donor, transfer, and gift letter meet FHA rules. A gift cannot require repayment.
A score from 500 to 579 requires at least 10% down under FHA guidelines. A score of 580 or higher permits 3.5% down. Your lender can require a higher score and must approve the full loan.
FHA rules may allow seller contributions toward eligible costs. The amount depends on the contract, appraisal, and current FHA limits.
Extra principal payments can build equity faster. A later refinance depends on your finances, home value, rates, costs, and approval.
Eligibility
FHA guidelines can allow a lower down payment and lower credit scores than some conventional loans. Approval still depends on your income, debts, funds, credit history, the property, and lender requirements.
FHA guidelines permit scores from 500, but lenders can set higher minimums. Your score affects the minimum down payment, and the lender reviews your full credit history. Bankruptcy and foreclosure waiting periods may apply.
FHA down-payment tiers apply only when the borrower and property meet all other requirements.
FHA guidelines allow 3.5% down with a score of 580 or higher. Eligible gift funds may cover the required down payment when they meet FHA source and documentation rules. Seller contributions may help with eligible closing costs.
FHA loans have an upfront mortgage insurance premium and an annual premium that is usually divided across monthly payments. Annual MIP generally lasts 11 years when the original loan-to-value ratio is 90% or less, and for the loan term when it is above 90%. A refinance creates a new loan and depends on approval, rates, costs, and terms.
We can compare FHA's full cost with conventional options for your profile.
Some Phoenix-area buyers may qualify for down-payment assistance. Funding and terms change, so ask us to confirm what is open.
See if FHA fitsLocal Help
Home in Five may offer down-payment and closing-cost assistance with an eligible first mortgage for a home in Maricopa County. Both first-time and repeat buyers may be eligible. Program funding and loan options can change.
The assistance amount, income limit, credit and debt-to-income rules, education requirement, interest rate, second-lien payment and forgiveness terms, and funding availability depend on the product and date. Ask our team to confirm which options are open and whether you qualify.
FHA IN PLAIN ENGLISH
Most first-time buyers ask us the same three things before anything else: how much you need down, what credit score it takes, and what mortgage insurance really is.
Jimmy walks through all three in a few minutes, in plain English. Watch it first, then bring us whatever it leaves unanswered. That's what we're here for.
Questions
An FHA loan is a mortgage issued by an approved lender and insured by the Federal Housing Administration. You can use an FHA program to buy, refinance, or improve an eligible primary residence, subject to program and lender rules.
FHA guidelines can allow a smaller down payment and more flexible credit review than some conventional loans. Mortgage insurance adds cost, so we compare both options before you choose.
Jimmy's team will look at your credit, your savings, and your goals in one honest conversation — no pressure, no obligation.
Why FHA
An FHA loan can be useful when a conventional loan does not fit your savings or credit profile. Our team will compare the down payment, mortgage insurance, rate, payment, and long-term cost with you.
Call, send a message, or visit our Phoenix office. We will explain the requirements and help you decide whether FHA fits your plans.
A track record you can verify
James Vercellino was listed among Scotsman Guide's 2026 Top Originators.
