What credit score and down payment do you need for an FHA loan?
FHA loans require just 3.5% down with a credit score of 580 or higher. Some programs go as low as a 500 score with 10% down. FHA is more forgiving on debt-to-income — I've seen approvals into the high 50s — but every FHA loan carries both an upfront and a monthly mortgage insurance premium.
Key takeaways
FHA is a great loan for the right person — especially first-time buyers and anyone working their way back to stronger credit. It opens the door to home ownership now, and once you're in, you can build the equity and credit history that lets you refinance later. Sometimes an FHA payment is simply better for a first-time buyer than going conventional, and I'll run both so you can see the difference.
What is an FHA loan?
An FHA loan is a mortgage insured by the Federal Housing Administration, part of the U.S. Department of Housing and Urban Development (HUD). Because the government backs the loan, lenders can approve lower credit scores, smaller down payments, and higher debt-to-income ratios than a conventional loan allows. It's the program that has helped people become homeowners since 1934, and it's still one of the most popular first-home loans in New Hampshire.
Here's the honest version of who it's for: FHA is a great fit if your credit is still climbing or your savings are thin, and it's often a temporary stepping stone — you get in now, build equity and credit, then refinance into a conventional loan later. Let me walk you through exactly how it works.
FHA loan requirements in New Hampshire
To qualify for an FHA loan, you'll generally need:
- A credit score of 580 or higher for the 3.5%-down option (or 500–579 with 10% down)
- Steady, documented income and about a two-year employment history
- A debt-to-income ratio that fits FHA guidelines — more forgiving than conventional, and I've seen approvals reach the high 50s with strong compensating factors
- The home used as your primary residence — FHA isn't for second homes or investment properties
- A property that meets FHA's basic condition and appraisal standards
Not sure where your credit or debt ratios land? Send me what you have and I'll tell you exactly where you stand — and what, if anything, is worth cleaning up first.
How much is the down payment on an FHA loan?
The minimum down payment is 3.5% of the purchase price with a 580 score. On a $300,000 home, that's $10,500 — and it can come from your own savings, a gift from family, or a down payment assistance program. If your credit score falls between 500 and 579, the minimum rises to 10%.
Compare that to the old myth that you need 20% down, and you can see why FHA opens so many doors.
FHA vs. conventional: which loan is better?
This is the comparison I run for almost every buyer, because the right answer depends entirely on your credit and your goals:
| Feature | FHA loan | Conventional loan |
|---|---|---|
| Minimum credit score | 580 (500 with 10% down) | ~620, best pricing at 680+ |
| Minimum down payment | 3.5% | 3% |
| Mortgage insurance | Upfront + monthly, often for the life of the loan | PMI only, removable at 20% equity |
| Debt-to-income flexibility | More forgiving | Up to a 50% hard stop |
| Best for | Lower credit or tighter ratios | Stronger credit, dropping MI later |
The headline: lower credit usually favors FHA; stronger credit usually favors conventional. Rather than guess, I price both side by side so you can see the real monthly difference in dollars — sometimes FHA wins, sometimes conventional does, and it's worth knowing before you write an offer.
FHA mortgage insurance, explained
Every FHA loan carries two mortgage-insurance pieces, and understanding them up front saves surprises later:
- Upfront premium (UFMIP) of 1.75% of the loan amount — almost always rolled into the loan rather than paid in cash at closing.
- Annual premium (MIP), billed monthly as part of your payment. On loans with less than 10% down, this generally stays for the life of the loan.
That sounds like a catch, and it can be — but for a lower-credit buyer the all-in FHA payment is often still cheaper than a conventional loan with its credit-based PMI. The common game plan I map out with clients: use FHA to get into the home now, build equity and credit, then refinance into a conventional loan to drop the insurance once you reach 20% equity.
What disqualifies you from an FHA loan?
The usual roadblocks are:
- A credit score below 500
- A recent bankruptcy or foreclosure still inside its required waiting period
- Debt-to-income that's too high even by FHA's generous standards
- An unpaid federal debt — for example, defaulted federal student loans or back taxes in collection
- Trying to use FHA for a second home or investment property
Here's the good news: most of these are fixable with a little time and a plan. Don't count yourself out before we talk — half my job is telling people they're closer than they thought.
Stacking FHA with New Hampshire Housing assistance
FHA is one of the loan types eligible for New Hampshire Housing's down payment assistance, which adds a fixed $5,000, $10,000, or $15,000 toward your down payment and closing costs. Layer that on top of FHA's low 3.5% down, and many New Hampshire buyers get into a home with very little out of pocket — I've had clients leave the closing table having spent next to nothing.
FHA loan limits in New Hampshire
FHA caps how much you can borrow, and the limit varies by county and updates every January. The Boston-metro counties in the southeast (Rockingham and Strafford) carry the highest limits, the Manchester–Nashua area sits in the middle, and most other counties use the standard floor. Because the figures reset each year, I'll give you the current limit for the exact county you're buying in — and if your purchase runs above it, I also handle jumbo financing.
Is an FHA loan right for you?
FHA is a starting point, not a dead end — it's frequently the smartest way into your first home while your credit and savings are still coming together. The only way to know whether it beats conventional for your numbers is to run both, so let's do that together. No cost, no pressure — just a clear comparison and a plan for your next step. Any rates referenced on this site are examples only and subject to change until locked.
Frequently asked questions
What is the difference between FHA and conventional loans?
FHA is government-backed and allows lower credit scores, lower down payments, and more forgiving debt ratios — the tradeoff is mandatory mortgage insurance. Conventional needs stronger credit but lets you remove PMI at 20% equity. For lower credit, the FHA payment is often better; I compare both for every buyer.
Can I get an FHA loan with a low credit score in New Hampshire?
Yes. The standard minimum is a 580 score with 3.5% down, and we have programs that go as low as 500 with 10% down. FHA also allows higher debt-to-income ratios, so you may qualify even if a conventional loan said no.
What disqualifies you from an FHA loan?
The most common roadblocks are a credit score under 500, a recent bankruptcy or foreclosure still inside its waiting period, debt-to-income that's too high even by FHA's generous standards, an unpaid federal debt (like defaulted student loans), or trying to use FHA for an investment property — it has to be your primary residence. Most of these are fixable with a little time and a plan, so let's look at your specifics before assuming you're out.
Can I use FHA with New Hampshire down payment assistance?
Yes. FHA is an eligible loan type for New Hampshire Housing's programs, so you can add a fixed $5,000, $10,000, or $15,000 in cash toward your down payment and closing costs. Paired with FHA's 3.5% down, many first-time buyers get in with very little out of pocket.
Can an older borrower get a 30-year FHA loan?
Yes. Federal law (the Equal Credit Opportunity Act) prohibits denying a mortgage based on age, so a 70-year-old can absolutely get a 30-year FHA loan as long as the income and credit qualify. Lenders look at your ability to repay, not how old you are.
Does FHA mortgage insurance ever go away?
On most FHA loans the monthly mortgage insurance stays for the life of the loan. The common strategy is to use FHA to get into the home, build equity and credit, then refinance into a conventional loan to drop the insurance once you reach 20% equity.
What is the FHA loan limit in New Hampshire?
FHA sets a loan limit that varies by county and updates every January. In southern New Hampshire the Boston-metro counties (Rockingham and Strafford) carry the highest limits, the Manchester–Nashua area (Hillsborough County) sits in the middle, and most other counties use the standard floor. Since the numbers change yearly, I'll tell you the exact current FHA limit for your county — or you can confirm it on HUD's official lookup. Limits are also higher for two-, three-, and four-unit homes.