FHA minimum requirements: what HUD actually publishes

Almost everything circulating about FHA mixes HUD's floor with what a lender asks. Here they are kept apart, each floor with the official rule behind it.

The lender does not use the first score you show it. HUD orders it to work out the decision credit score (MDCS). Of the scores reported for each person, the middle one counts if there are three, the lower one if there are two, and that one if there is just one. If you buy with someone else, the lowest in the group rules.

• Newer scoring models do not move these floors. HUD will add newer score models (FICO 10T and VantageScore 4.0) for cases assigned from January 1, 2027, and put in writing that the 500 and 580 floors stay the same.
• No credit history is not the same as bad credit. If you have no traditional history, HUD allows you to reach the maximum financing, but an underwriter reviews your case by hand and counts payments like rent and utilities.
• HUD's floor is not your lender's floor. A 620 you are asked for is that lender's rule, not FHA's. If you are told no with a score above 580, FHA did not close the door: that lender set its own floor.

To raise your score before buying, see what score you actually need.

HUD calls it the minimum required investment. It is based on the adjusted value: in a purchase, the lower of the sale price and the appraised value (the valuation by the FHA appraiser). If the home appraises below the price, the minimum is measured on the appraisal, and the gap to the price comes out of your pocket.

It does not have to come only from your savings. HUD's handbook accepts:

• Your savings and accounts, documented.
• A gift that is not repaid, from a relative, your employer or union, a charitable organization, a government agency with a buyer program, or a close friend with a clearly defined, documented interest in you. The lender asks for a signed gift letter and a traceable transfer.
• Government assistance. HUD clarified that its rules on interested parties do not block money from a government entity that originates your loan through its housing program, with papers that prove it. Whether a specific assistance program combines with your loan is confirmed by the lender and the program, with both sets of documents. There is down payment help in Miami-Dade.

None of that money can come from the seller, from anyone who gains from the purchase (the agent, the builder, the lender itself), or from someone they will reimburse. That is treated as an incentive and is deducted from the price.

The 3.5% minimum sounds small until you price it: on a $400,000 house it is $14,000, and closing costs come on top. HUD’s rule already leaves the door open — the money can come from a government assistance program, with the program’s paperwork — but each program has its own design: some are built to sit behind an FHA loan, and others stack only if the lender and the program confirm it in writing. These are the ones that matter here, in that order.

The one built for FHA: Chenoa Fund. It is a second loan designed to cover the down payment of an FHA first mortgage. It can give you up to 5% of the home price: more than the 3.5% FHA asks for, so the extra can ease closing costs. It comes from CBC Mortgage Agency, nationwide and all year — not a fund that runs out by season. Depending on the variant, that second loan is repaid (with payments) or forgiven over time if you meet the conditions; your lender tells you which one you get before you sign. To get in: a credit score of 600 or more (below 640, the homebuyer course is required), and you do not need to be a first-time buyer. The requirement that stops the most cases is a different one: your lender has to be approved by Chenoa Fund. If your lender does not work the program, the assistance exists but not for you with that lender.

State, county and city assistance. Florida Housing products and the Miami-Dade, Broward and city programs run behind a first mortgage, and FHA is a common one. But stacking is not automatic: each program publishes which loan types it works with, and your lender has to originate both at the same time. The right question is not “can it stack?” but “does this lender work this assistance with an FHA loan?” — and it gets asked before you fall for a house, not in closing week.

What stacking does not erase. Adding assistance does not remove FHA loan insurance (the MIP, covered further down in this guide), and if the assistance is repaid monthly, that payment counts in your debts when the lender measures how much you are approved for. The honest math is: down payment covered, yes; how much cash do you still need to close, and how much do you pay per month with everything stacked? That gets worked out with your numbers, not the example’s.

FHA compares what you pay each month with your effective income (the income the lender can count under the handbook). There are two ratios: the housing one (the total payment on the home) and the total one (housing plus all your fixed debts). When a person reviews your file by hand, the handbook publishes this matrix:

The factors in your favor (compensating factors) are only four: verified cash reserves, a minimal increase in your housing payment compared with the current one, significant additional income not counted in your effective income, and residual income (what is left after all your payments).

This matrix is the one for a manual review. Many files go first through HUD's automated system, which weighs the whole file, and the handbook does not publish a single table of maximum ratios for it. If a site promises a higher limit as if it were HUD's rule, it is selling some lenders' practice. And being under the limit does not approve you either: the lender also looks at your payment history and the stability of your income.

Every FHA loan pays mortgage insurance in two parts. HUD publishes the rates and they are the same for everyone: they do not depend on your score.

The upfront premium is 1.75% of the base loan, once. It is paid at closing (the day you sign the purchase) or added to the loan.

The annual premium is a percentage of the balance, collected spread across your payments. For the most common case (a loan of more than 15 years, below the table's threshold), HUD's Mortgagee Letter 2023-05 sets it like this:

With Chenoa Fund, on paper yes: the 5% it can give covers the 3.5% FHA asks for. It is the combination this family of questions looks for most, and it is real — with three conditions worth having clear before you count on it:

• Your credit rules twice: FHA finances the maximum from 580, but Chenoa asks for 600. Between 580 and 599 you can have the loan and not the assistance.
• Your lender has to be approved by Chenoa Fund and originate both loans at the same time.
• Zero down payment is not zero cash: closing costs and whatever the appraisal leaves out (if the home appraises below the price, the difference comes out of your pocket) still call for your money or another assistance that does stack.

If any of the three fails, plan B is not dropping FHA: it is stacking a state, county or city assistance your lender does work with FHA, or saving the 3.5% over more time. The Miami-Dade down payment assistance guide lists the ones open today, with their amounts.

Before your credit and your down payment, FHA looks at the building: either HUD approved it, or your unit wins single-unit approval. It is explained in Buying a condo with an FHA loan. Meeting the floors in this guide approves no loan: the decision belongs to an FHA-approved lender, case by case. Closing expenses are in closing costs in Florida.

• HUD, Mortgagee Letter 2026-11 (October 8, 2026; in effect from January 1, 2027; the floors and the ratio matrix do not change), decision score and ratio matrix: hud.gov
• HUD, Handbook 4000.1 (Update 18), minimum investment and sources of the money: hud.gov
• HUD, release 23-041 and Mortgagee Letter 2023-05, annual premium: archives.hud.gov