An FHA loan is a government-insured mortgage that helps buyers with smaller down payments or less-than-perfect credit. If you are researching FHA loan requirements in California, here is what to know.
Down payment and credit
- 3.5% down with a credit score of 580 or higher.
- 10% down for scores between 500 and 579, though many lenders set higher minimums.
Mortgage insurance
FHA loans carry an upfront mortgage insurance premium (usually financed into the loan) plus an annual premium paid monthly. Depending on your down payment and loan term, the annual premium may last for 11 years or the life of the loan. Include it in your budget when comparing with conventional loans.
Debt-to-income and income
FHA guidelines are generally more flexible on debt-to-income ratios than many conventional programs, but lenders still need stable, documented income and a history of managing credit.
FHA loan limits
FHA limits vary by county and are higher in high-cost areas such as Los Angeles County. Check the current limit, since many Westside homes will exceed it.
Property requirements
The home must be your primary residence and meet FHA minimum property standards, which are checked during the appraisal. It can be a single-family home, condo in an FHA-approved project, or a two- to four-unit property where you live in one unit.
Down payment help and gifts
FHA allows gift funds from family, and it can be combined with certain down payment assistance. See our guide to California first-time buyer programs.
FHA vs. conventional
FHA is often best for buyers with lower credit scores or small down payments. If you have strong credit and 5% or more to put down, a conventional loan may cost less over time because mortgage insurance can be removed. A loan officer can compare both for you.
Frequently asked questions
Can I use an FHA loan in Los Angeles?
Yes, as long as the loan amount is within the county limit and the home meets FHA standards.
What credit score do I need for an FHA loan?
The FHA minimum is 580 for 3.5% down, but lenders often set their own minimums.
Can I buy a multi-unit with FHA?
Yes, up to four units if you will live in one.
See whether an FHA loan or a conventional loan costs less for you.
This article is general information, not a loan commitment, legal or tax advice. Programs, rates and rules change, so confirm current details with a licensed professional before you decide.
Written by the Terranova Real Estate Group team · DRE 01785581 · NMLS 1091484 · Meet Griselda Espinoza