FHA loan requirements are looser than most conventional programs. As of 2026, HUD guidelines allow a 3.5% down payment with a 580 minimum credit score, and a 10% down option for scores between 500 and 579. Those are HUD’s floors, not a promise of approval, and the gap between the two is where most Virginia buyers get surprised.
FHA also isn’t only for first-time buyers; repeat buyers use it too. Below are the credit, down payment, income, property, and mortgage insurance rules, followed by what a typical Virginia FHA loan costs per month at three illustrative rates.
By Duane Buziak, NMLS #1110647
Credit Score and Down Payment: The Two Numbers That Set Your Tier
HUD ties the minimum down payment to your credit score. A score of 580 or higher qualifies for maximum financing, which means 3.5% down. A score of 500 to 579 requires 10% down. Confirm the current wording in HUD Handbook 4000.1, since HUD revises it periodically.
The dollar difference is large. On a $400,000 Virginia purchase, 3.5% down is $14,000, leaving a base loan of $386,000. At 10% down, you need $40,000 and the base loan is $360,000. For most buyers with modest savings, the score tier decides whether the purchase is feasible at all, and the minimum credit score for a home loan varies by program.
HUD minimums versus overlays
An overlay is a stricter rule a lender adds on top of HUD’s. Many lenders set their own floor at 600 to 640, and some will not touch the 500 to 579 tier at all. A 580 score can be fully HUD-eligible and still get declined by a particular lender, which is why 580 does not guarantee approval.
This is the practical reason to work with a broker. Duane Buziak compares FHA overlays across many lenders at once, so a score that fails one lender’s floor can be matched with a lender whose floor fits. For a deeper look at lender-by-lender differences, see how FHA loan options at Powerhouse compare to competitors.
Where the down payment can come from
Your own savings are the simplest source. HUD also allows gift funds from family members, employers, and approved organizations, as long as the gift is documented with a signed gift letter and a paper trail showing the money moved. Undocumented cash deposits are what typically cause delays.
Down payment assistance can also help. Virginia Housing has offered assistance programs that pair with FHA loans, but eligibility, income limits, and funding change, so verify what is available as of 2026 before you count on it.
Income, Employment and Debt-to-Income Limits
Underwriters expect two years of employment history, though not necessarily with one employer. Gaps, job changes, and shifts in pay structure need a written explanation. Self-employed borrowers typically document income with two years of personal and business tax returns, and the underwriter averages net income after deductions.
Debt-to-income ratio (DTI) compares your monthly debts to your gross monthly income. HUD’s standard benchmarks are 31% for the front-end ratio (housing payment alone) and 43% for the back-end ratio (housing plus all other monthly debts). Check the current guidance in Handbook 4000.1.
Those are benchmarks, not hard ceilings. Loans run through an automated underwriting system (AUS) can be approved at higher ratios when compensating factors exist, such as cash reserves, a strong payment history, or a modest increase over your current housing payment. Individual lenders may cap DTI lower than the AUS allows.
A simple DTI calculation
Suppose you earn $6,500 gross per month. Your proposed housing payment (principal, interest, taxes, insurance, and mortgage insurance) is $2,400, and you carry $450 in monthly debts such as a car payment and student loans.
- Front-end: $2,400 ÷ $6,500 = 36.9%
- Back-end: ($2,400 + $450) ÷ $6,500 = 43.8%
That borrower exceeds both standard benchmarks, so approval would depend on AUS findings and compensating factors. Paying off a $450 debt, or lowering the housing payment by a few hundred dollars, can move the ratio back under 43%.
You can test numbers like these before anything touches your credit file. A soft credit pull mortgage prequalification shows how a lender or broker reads your income, debts, and score without a hard inquiry, so you can adjust the plan first and apply once the picture is clear. When you are ready, you can apply for an FHA loan online step by step.
Property Standards and FHA Loan Limits in Virginia
An FHA loan must be for your primary residence. You generally need to move in within 60 days of closing and intend to live there for at least a year. Owner-occupied properties with one to four units qualify, so buying a duplex or fourplex and living in one unit is a legitimate FHA strategy.
What the appraisal checks
The FHA appraisal evaluates value and also safety, soundness, and security. Common problems that stall files include peeling paint on older homes, missing handrails on stairs, a roof near the end of its life, exposed wiring, and utilities that are off at inspection. The standard is a safe, structurally sound home, not a perfect one. Cosmetic wear does not fail an appraisal.
VA appraisals use their own minimum property requirements, which are similar in spirit but handled under a separate program.
When the home needs work
If repairs are needed, the FHA 203(k) program rolls the purchase price and renovation costs into one loan. Home renovation loans from Duane Buziak can serve the same purpose when a 203(k) is not the best fit, and both options let you buy a home that would otherwise fail inspection. See the best home renovation loan options for a side-by-side look.
Virginia loan limits
FHA limits vary by county. As of 2026, the one-unit limit is roughly $541,287 in most of Virginia and rises to the high-cost ceiling of roughly $1,249,125 in Northern Virginia counties such as Arlington, Fairfax, and Loudoun. A few markets fall between the two. Look up your exact county on HUD’s FHA loan limit lookup, because multi-unit limits are higher and the numbers reset each year.
FHA Mortgage Insurance: Upfront and Annual Premiums
Every FHA loan carries two forms of mortgage insurance premium (MIP). The upfront premium is 1.75% of the base loan amount (the loan before any financed premium). On a $386,000 base loan, that is $6,755. Most borrowers finance it, which raises the loan balance to $392,755.
The annual premium is divided into monthly payments. Its rate depends on loan amount, term, and loan-to-value. Under the schedule in HUD Mortgagee Letter 2023-05, a 30-year loan at typical Virginia amounts with less than 5% down carries 0.55% per year. Confirm that the table is still current as of 2026.
How long it lasts
If your down payment is under 10%, annual MIP generally lasts for the life of the loan. With 10% or more down, it drops off after 11 years. Because of this, many FHA borrowers plan to refinance out of the program once they have enough equity and a qualifying score.
FHA MIP is not the same thing as conventional private mortgage insurance. Conventional PMI can typically be cancelled once equity builds, as the CFPB explains. FHA MIP generally cannot, unless you hit the 10% down threshold at the start. If you are weighing the two, read FHA loan vs conventional loan before you decide.
| Feature | FHA MIP | Conventional PMI |
|---|---|---|
| Upfront cost | 1.75% of base loan, usually financed | Usually none; cost is built into a monthly premium |
| Cancellation | Life of loan under 10% down; 11 years at 10% or more | Can typically be removed as equity builds |
| Credit sensitivity | Same premium table across most scores | Premium rises sharply as scores fall |
| Best-fit borrower | Lower scores, smaller down payments, higher DTI | Scores of roughly 680 and up with 5% or more down |
What an FHA Loan Costs at 6.25%, 6.75% and 7.25%
The table below uses a $386,000 base loan on a 30-year fixed term, which matches a $400,000 Virginia purchase with 3.5% down. The three rates are illustrative, not quotes. Rates move daily; check the current national average on Freddie Mac’s PMMS for where the market stands as of October 2026.
| Rate | Principal and interest | Total interest over 30 years | Est. monthly MIP | P&I plus MIP |
|---|---|---|---|---|
| 6.25% | $2,376.67 | $469,601 | $176.92 | $2,553.59 |
| 6.75% | $2,503.60 | $515,296 | $176.92 | $2,680.52 |
| 7.25% | $2,633.21 | $561,956 | $176.92 | $2,810.13 |
The MIP estimate assumes 0.55% annually on $386,000, or $2,123 a year. Taxes and homeowners insurance are excluded. Financing the $6,755 upfront premium adds roughly $42 to $46 a month to principal and interest, depending on the rate. Every half point moves the payment by about $127 to $130, and total interest by roughly $46,000 to $47,000.
Points breakeven
Suppose a broker offers one discount point, $3,860 on $386,000, to lower the rate from 6.75% to 6.50%. The payment at 6.50% is $2,439.78, versus $2,503.60 at 6.75%, a savings of $63.82 a month. Dividing $3,860 by $63.82 gives a breakeven of about 60.5 months, so you come out ahead after roughly five years. If you expect to sell or refinance sooner, the point costs more than it saves. Actual pricing varies by day and by lender.
What drives your rate
Loan-level pricing adjustments, credit score, and loan-to-value all affect the quote. FHA pricing is generally less score-sensitive than conventional pricing, but it still varies, and a 580 score will usually price worse than a 700. If you are comparing programs, the best mortgage loans for first-time buyers shows how FHA stacks up against other options at three rates.
Applying Through Duane Buziak: Broker Access vs. Single-Shelf Lenders
Duane Buziak shops hundreds of lenders at one time, which matters because FHA overlays differ from one lender to the next. A single-lender shop can only offer its own floor, its own pricing, and its own turn times. A broker can route your file to the lender whose rules and rate fit you best.
| Factor | Broker (Duane Buziak) | Single-lender shop |
|---|---|---|
| Number of lenders | Hundreds, compared at once | One |
| Overlays | Can match your file to a lender with a lower credit or DTI floor | Fixed to that lender’s own overlays |
| Rate shopping | Multiple wholesale prices side by side | One rate sheet |
| Speed | Can move a file to lenders with faster close times | Depends on a single lender’s queue |
| Credit impact | NoTouch Credit PreQual uses a soft pull, no hard inquiry | Often a hard inquiry at application |
The process is short.
- NoTouch Credit PreQual. This is a no hard inquiry mortgage pre approval step. It uses Vantage Score 4.0 and gives you a read on eligibility without affecting your score.
- Documents. Pay stubs, two years of W-2s or tax returns, bank statements, and gift letters if applicable.
- Appraisal. The FHA appraiser checks value and the safety standards covered above.
- Closing. Duane Buziak aims for some of the fastest close times available, and works with Realtor referrals when you still need an agent.
That soft pull mortgage broker approach means you can compare programs, test DTI, and see where your score lands across lenders before a hard inquiry is ever needed. Buyers who want a local guide can start with finding a top-rated FHA loan lender in Virginia.
The Thresholds to Check Before You Apply
Four numbers decide most FHA outcomes: a 580 score for 3.5% down, 10% down below that, a 43% back-end DTI benchmark (higher with AUS approval), and MIP that lasts the life of the loan when you put down less than 10%. If you clear those, lender overlays and county loan limits are the last things to verify.
Get your free NoTouch Credit PreQual today and discover your buying power without impacting your credit score, then see why Virginia homebuyers choose Powerhouse Mortgages by Duane Buziak for faster close times and access to hundreds of lenders working for you.
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