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FHA loans
More forgiving on credit and on debt than conventional is, at 3.5% down, and the catch is mortgage insurance that usually doesn't go away.
Last reviewed 22 August 2026 · Mark Ruhl, NMLS #105591
What it is
An FHA loan is insured by the Federal Housing Administration, and that insurance is the reason lenders will accept credit and debt profiles they would otherwise decline outright. It exists specifically to widen access to homeownership, and it does that job well.
3.5% down at a 580 credit score. 10% down at 500 to 579. Debt-to-income limits run higher than conventional allows, and gift funds are broadly permitted. For a lot of first-time buyers this is the only realistic door into a house, and there is nothing second-class about walking through it.
The tradeoff, stated plainly
FHA charges an upfront mortgage insurance premium and a monthly one. When you put less than 10% down, the monthly premium generally lasts the entire life of the loan. It does not fall off at 78% the way conventional mortgage insurance does.
So if your credit is strong enough for conventional, run both, and if you qualify conventionally, take conventional. Over ten years the FHA premium frequently costs more than a slightly higher conventional rate would have. And if your credit isn't there yet, FHA now with a refinance into conventional later is a perfectly good plan, and a very common one.
Where FHA is the better answer
- Credit in the 580–640 range, where conventional pricing gets punishing or disappears altogether.
- Higher debt-to-income than conventional will accept.
- Recent credit events, because FHA's seasoning requirements after a bankruptcy or a foreclosure are shorter.
- Properties needing repair, via 203(k) renovation financing.
One change worth knowing about
Effective for case numbers assigned on or after May 25, 2025, HUD limited FHA eligibility to U.S. citizens and lawful permanent residents, removing non-permanent resident eligibility entirely. So if that affects you, the ITIN page covers what's left on the table.
2026 FHA loan limits, every Oregon county
FHA sets these by metro area rather than by county, which is why a Bend buyer gets more room than a Portland buyer even though Portland is the bigger city. The numbers below are pulled straight from HUD's CY2026 loan limit file, county by county. They reset each January.
| Counties | 1-unit | 2-unit | 3-unit | 4-unit |
|---|---|---|---|---|
| Hood River Hood River MSA. Oregon's highest. | $762,450 | $976,100 | $1,179,850 | $1,466,250 |
| Crook, Deschutes, Jefferson Bend MSA | $718,750 | $920,150 | $1,112,250 | $1,382,250 |
| Clackamas, Columbia, Multnomah, Washington, Yamhill Portland–Vancouver–Hillsboro MSA. Clark County, Washington sits in this same metro. | $701,500 | $898,050 | $1,085,550 | $1,349,050 |
| Benton Corvallis MSA | $615,250 | $787,650 | $952,050 | $1,183,200 |
| Clatsop Astoria MSA | $563,500 | $721,400 | $872,000 | $1,083,650 |
| Every other Oregon county The national floor. Baker, Coos, Curry, Douglas, Gilliam, Grant, Harney, Jackson, Josephine, Klamath, Lake, Lane, Lincoln, Linn, Malheur, Marion, Morrow, Polk, Sherman, Tillamook, Umatilla, Union, Wallowa, Wasco and Wheeler. | $541,287 | $693,050 | $837,700 | $1,041,125 |
Notice that a two-unit property in the Portland metro gets $898,050 rather than $701,500, and a fourplex gets $1,349,050. FHA will finance two to four units at 3.5% down as long as you live in one of them, and the limit climbs with each unit.
So a buyer who can't reach a single-family house in this market can sometimes reach a duplex, have a tenant cover a chunk of the payment, and still be in with 3.5% down. It's the most underused thing on this page, and Portland's middle-housing rules have made a lot more of these properties exist than there used to be.
Above these numbers you're into jumbo territory, which is a different animal. And in Lake Oswego and West Linn that ceiling is a live constraint on ordinary purchases rather than a theoretical one, so it's worth knowing where you stand before you write an offer.
Common questions
What's the minimum credit score?
580 for 3.5% down; 500–579 requires 10% down. Individual lenders often impose higher overlays than FHA's actual floor, and being a broker means I can go find the ones that don't.
Can I get rid of FHA mortgage insurance?
Usually only by refinancing into a conventional loan. Once you have 20% equity that refinance is often worth doing even at a slightly higher rate, but run the numbers before you assume it either way.
Are FHA loans only for first-time buyers?
No. Anyone can use FHA for a primary residence. You generally can't have two FHA loans going at the same time, with some narrow exceptions.
Is this the right one for you?
Tell me the situation in plain language and I'll tell you which program actually fits, including the times when the answer turns out to be a different one than the page you're reading.