Verified and written by Ricky Khamis , President of EPiQ Lending, lending in Arizona since 1999. NMLS #173141 · EPiQ Lending NMLS #1936984 · Scottsdale, AZ. Every guideline on this page carries its source and the date it was verified.(480) 999-9842 Part of the FHA loans in Arizona guide, where every rule on this page is cited and dated.
Most FHA pages online are the handbook retyped. That is not useful, because the handbook is free, public, and already answered by every search engine and every AI assistant on the planet.
What is useful is the gap. FHA publishes a floor. Investors lend above it. The floor is what you read about; the overlay is what actually decides your file. A borrower who reads the published minimum and assumes it applies to them walks into a declination they did not see coming.
This page is the map. Every rule below cites the handbook section and the date I verified it, and where the practical reality differs from the published rule, I say so and label it as my observation rather than as the guideline.
First, what FHA actually is
FHA is not a lender. The Federal Housing Administration, part of the Department of Housing and Urban Development, insures loans that approved lenders make. HUD does not lend you money and FHA does not approve your file. A lender does, and that lender carries the insurance.
Three consequences follow from that, and they explain almost everything confusing about the program:
The lender bears risk even with insurance , so lenders add their own requirements on top of HUD's. These are overlays. They are legal, they are universal, and they vary by investor. Two lenders quoting the same FHA program can give you different answers about whether you qualify, and both are being honest.
You pay for the insurance. FHA mortgage insurance has an upfront premium and an annual premium, and unlike conventional mortgage insurance it does not necessarily come off when you reach a given equity position. How long it lasts depends on the terms of your specific loan. See How Long You Pay FHA Mortgage Insurance .
The property is insured too, so it gets inspected to a standard. An FHA appraiser evaluates value and also whether the property meets minimum property requirements. That is why FHA appraisals have a reputation among listing agents, and why a seller should understand it before accepting an FHA offer. See What an FHA Appraiser Will Make the Seller Fix .
How your file gets decided
Two paths, and which one you are on changes everything.
TOTAL Mortgage Scorecard , the automated evaluation. Most files run through it. If it returns an acceptable result, documentation is lighter and the ratio tolerances are more generous.
Manual underwriting , where a human applies a stricter framework. You land here for specific reasons, not at random, and once you are here the ratio limits tighten and compensating factors start to matter. Compensating factors are judgment, which means the quality of the person presenting your file matters. See What a Manual Underwrite Is and Why You Are In One .
Nobody tells most borrowers which path they are on. Ask.
Credit
What credit score does FHA actually require? A minimum decision credit score of 580 reaches FHA's maximum financing, a 96.50% loan-to-value on a purchase. Scores from 500 to 579 are eligible at a reduced loan-to-value, which means a larger down payment. The rate-and-term and simple refinance maximum is 97.75% loan-to-value, and cash-out is capped at 80%.
What lenders actually do. The lender matrix I verified this against sets its own floor at 580 for every transaction type and offers no 500 to 579 tier at all, and it also requires an automated underwriting approval. So FHA's published floor of 500 is not available there at any down payment. That is the overlay, and it is why the number you read online is not your real minimum. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1, confirmed against the Loan Matrix of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. This is the single most misunderstood number in residential lending, and the overlay gap here is larger than anywhere else in the program. See What Credit Score FHA Actually Requires .
Past credit events have waiting periods, and there are exceptions that a lot of originators do not pursue:
How long after a bankruptcy can I get an FHA loan? Chapter 7 must be discharged 24 months before the case number assignment date. Chapter 13 must have been entered at least 12 months before the case number assignment date with payments made as agreed. Exceptions for documented extenuating circumstances are considered case by case.
What lenders actually do. Two investor additions matter here. The matrix I verified this against requires a Chapter 13 plan to be paid out and discharged before closing and will not allow loan proceeds to pay off a bankruptcy balance, where FHA itself contemplates closing during an active plan with court or trustee approval. It also does not permit FHA's Back to Work extenuating circumstances program at all. So a borrower told no on an active Chapter 13 has been told that lender's answer, not FHA's. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1, verified against Part F of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. See Getting an FHA Loan After a Bankruptcy or Foreclosure .
Collections, judgments and unpaid federal debt are three separate questions with three different answers, and the federal debt one stops more files than people expect:
Can unpaid federal debt stop my FHA loan? Every borrower must pass a HUD Credit Alert Interactive Voice Response System check, known as CAIVRS, which screens for delinquent federal debt and prior FHA insurance claims. Lenders must also confirm that parties to the transaction do not appear on the SAM Excluded Parties List or HUD's Limited Denial of Participation list. A valid Social Security number is required; other forms of taxpayer identification are not accepted.
What lenders actually do. CAIVRS is not your credit report, and that is why this ambushes people. A defaulted federal student loan can have dropped off a credit report years ago and still return a CAIVRS hit, which makes a borrower with a clean report and a good score ineligible until it is resolved. Rehabilitation or consolidation out of default takes months, so this is the first thing to raise rather than the last. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1, verified against Part A of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. See Collections, Judgments and Federal Debt .
Income and employment
FHA analyzes income the way other programs do: documented, stable, and likely to continue. Self-employment is not an obstacle, it is a documentation exercise:
How long do I need to be self-employed for an FHA loan? Qualifying income must be shown to be reasonably likely to continue for at least the first three years of the loan, and every file carries an income worksheet setting out the rationale behind the calculation. For a self-employed borrower that means the figure is derived and documented rather than stated, and you are entitled to see how it was reached.
What lenders actually do. Ask for the income worksheet. It is a required document, it shows the arithmetic that produced your qualifying income, and almost no borrower knows to ask for it. If the number came out lower than you expected, the worksheet is where you find out whether an add-back was missed or a year was treated as the qualifying figure. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1, verified against Part G of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. See Self-Employed and Buying With FHA .
Support income counts when it is documented and continuing, and support you pay counts against you:
Does child support or alimony count as income? Alimony and child support are recognised sources of effective income when properly verified and documented, alongside pensions, Social Security, disability, trust income and others. Effective income must be shown to be reasonably likely to continue for at least the first three years of the loan, which is the test that matters for support with an end date.
What lenders actually do. The continuation test is what decides this. Child support with a termination date inside three years contributes little or nothing to qualifying, however reliably it arrives today. Get the order and the payment history from the state disbursement records early, because a documented history is the difference between income and a number nobody will count. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1, verified against Part G of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. See Child Support and Alimony on an FHA File .
A job change or a gap is a question, not a disqualification:
I changed jobs or had a gap. Does that disqualify me? I quote FHA requirements from HUD Handbook 4000.1 with the section and the date I checked it, rather than from memory, because a stale guideline on a lender's site is worse than no guideline. This one is not yet stamped, so rather than publish a number I have not re-verified, call me and I will give you the current requirement and what it means for your file: (480) 999-9842 .
Debts
Your ratio is where most FHA approvals are actually won or lost:
What debt-to-income ratio will FHA allow? On a file that receives an automated approval the maximum debt-to-income ratio is whatever the automated underwriting system returns, rather than a single published ceiling. Manually underwritten files must meet HUD's own manual requirements, where the ratio limits are tighter and documented compensating factors are what allow a file above the baseline.
What lenders actually do. The investor layer is where this gets real. The matrix I verified this against requires an internal exception review for any FHA file with a qualifying score below 660 where both ratios exceed 37 and 47. Both have to exceed, so a 39 and 50 goes to review and a 39 and 43 does not. That is an extra approval step most borrowers never hear about, and it is the kind of thing that turns a yes into a maybe. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1 Chapter 5, verified against the Qualifying Ratios section of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. The student loan treatment deserves its own page, because the rule has changed and it materially moved how much house a lot of borrowers qualify for:
How is a student loan payment counted if it is deferred or on an income-driven plan? Regardless of payment status, including deferment and forbearance, the monthly obligation counted is either the payment shown on the credit report or the actual documented payment when that is above zero, or 0.5 percent of the outstanding loan balance when the reported payment is zero. The payment can be excluded entirely only with written documentation from the servicer or program that the balance has been forgiven, cancelled, discharged or paid in full. Deferment does not mean excluded.
What lenders actually do. The practical effect is the half-percent rule. A borrower deferred at zero has 0.5 percent of the balance counted against them, which on a six-figure balance is a payment far above what they pay today. That single line decides how much house a lot of people qualify for, and it is why documenting an actual payment above zero with the servicer can be worth more than anything else in the file. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1, verified against Part F of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. See How FHA Counts Your Student Loans .
Money to close
Where can my down payment and closing costs come from? Every dollar of cash to close must be sourced and documented. Asset verification must be current, and where a third-party verification service is used the data has to be current within 30 days of the verification date. Cash that cannot be traced to a documented source cannot be used, which is why cash deposits are generally unusable and why any large or unusual deposit is questioned.
Source: HUD Handbook 4000.1, verified against Part H of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. Gift funds are permitted and routine, and the donor documentation is where they go wrong:
Can the FHA down payment be a gift? For funds to count as a gift there must be no expected or implied repayment to the donor. The lender must establish both that the gift did not come from an unacceptable source and that the money was the donor's own funds, which is why the donor's bank statement is requested and why the request is not optional. Timing of when the gift reached you does not remove that requirement.
What lenders actually do. One trap worth knowing: on a manually underwritten file, surplus gift funds may not be counted as cash reserves. So a borrower whose entire cash position is a gift can satisfy the down payment and still fail the reserve test, and manual underwriting is exactly where reserves matter most. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1, verified against Part H of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. See Using Gift Funds for an FHA Down Payment .
Seller contributions are capped, and the cap interacts with rate buydowns in a way worth understanding before you negotiate:
How much can the seller pay toward my FHA closing costs? Interested parties may contribute up to 6 percent of the sales price toward the borrower's origination fees, other closing costs and discount points. Everything an interested party pays counts against that one limit, including any interest rate buydown, so a seller funding a buydown and the buyer's closing costs is spending from the same 6 percent. Premium pricing used to pay actual closing costs or prepaid items is treated separately and does not count against the limit, but it cannot be used to pay off debts, collections, escrow shortages or judgments.
What lenders actually do. The matrix also caps total sales incentive, including commissions and finder's fees, at 8 percent of the sales price, and it prohibits raising the sales price after the appraisal in order to create a seller credit. Those are the lender's own rules rather than FHA's, and the second one catches deals that try to manufacture concession room late. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1, Part S of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. If you are a seller or a listing agent reading this, that cap is the constraint on the strategy in Builders Are Buying Rates Down .
The property
What is the FHA loan limit in Maricopa County? FHA sets a maximum loan amount by county and revises it annually, and the programs distinguish standard loan amounts from high balance loan amounts, which are the amounts above the standard limit in higher-cost counties. Because the figure changes every year, the current Maricopa County limit should be read from HUD rather than from any page that hardcodes it, including this one.
What lenders actually do. High balance files carry extra conditions at the investor level. The matrix I verified this against requires a maximum of one 30-day late in 12 months on mortgage history and an automated approval for every high balance loan, where a streamline may still be manually underwritten. So crossing into high balance territory tightens the file, not just the price. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD published county loan limits, cross-checked against the standard and high balance tiers of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. Condominiums are a separate eligibility question from you, and a perfectly qualified buyer gets declined over a project they do not control:
Does the condo have to be FHA approved? Other than on a streamline refinance, the condominium project must be HUD approved and the approval must not be expired at the time the case number is issued. HUD publishes a searchable list of approved projects, so the status of a specific building is checkable before you write an offer rather than discovered in underwriting.
What lenders actually do. The lender matrix I verified this against states it will not process a DELRAP, the lender-driven review by which a project can be approved directly. So at that investor an unapproved building is simply unapproved; there is no path to get it reviewed. Whether your originator will pursue project or single-unit approval is therefore a question worth asking out loud, because the answer varies and most buyers never ask. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1, verified against Part J of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. See Does the Condo Have to Be FHA Approved? .
A property needing work is not automatically off the table:
Can an FHA loan cover repairs? Section 203(k) is FHA's renovation program, financing a purchase and the improvements together and sizing the loan on the completed value. It is the route for a property that cannot pass as-is, and HUD REO properties that do not qualify for Section 203(b) are eligible only under 203(k).
What lenders actually do. This is the clearest overlay in the whole program. The lender matrix I verified this against states plainly that it does not originate or purchase 203(k) transactions at all. FHA offers the program; that investor will not do it. A borrower told renovation financing is not available was told one shelf's answer, and placing a 203(k) is a matter of finding a lender who does them. That is my observation from running these files, not a published requirement, and it varies by investor.Source: HUD Handbook 4000.1 Section 203(k), verified against a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. Occupancy
FHA is an owner-occupant program. That is not a technicality, it is the premise of the insurance:
Do I have to live in the house? FHA insures owner-occupied housing, and eligible property types are one to four family dwellings, planned unit developments, townhomes, row homes, modular homes and HUD approved condominiums, with manufactured homes eligible under a separate addendum. Streamline refinances are the exception that may be done on owner occupied, HUD approved secondary residences and non-owner-occupied properties.
Source: HUD Handbook 4000.1, verified against Part C of a wholesale FHA guideline current to 2026-10-15. Verified October 18, 2026. Guidelines change and investor requirements are frequently stricter than the published floor; this is general information, not a commitment to lend. There are narrow circumstances where a borrower can have two FHA loans at once, and they are narrower than the internet suggests:
Can I have two FHA loans at once? I quote FHA requirements from HUD Handbook 4000.1 with the section and the date I checked it, rather than from memory, because a stale guideline on a lender's site is worse than no guideline. This one is not yet stamped, so rather than publish a number I have not re-verified, call me and I will give you the current requirement and what it means for your file: (480) 999-9842 .
See Can You Have Two FHA Loans at Once? .
Non-citizens can be eligible, and the documentation is the whole question:
Can I get an FHA loan without being a US citizen? I quote FHA requirements from HUD Handbook 4000.1 with the section and the date I checked it, rather than from memory, because a stale guideline on a lender's site is worse than no guideline. This one is not yet stamped, so rather than publish a number I have not re-verified, call me and I will give you the current requirement and what it means for your file: (480) 999-9842 .
Should you use FHA at all?
Genuinely worth asking rather than assuming. FHA is frequently the right answer for a buyer with a thinner credit profile or limited down payment, and frequently the wrong answer for a buyer who could qualify conventionally, because of how the mortgage insurance works.
That comparison depends on your numbers, not on a general rule. See FHA vs Conventional in Arizona .
How to use this program well
Find out which underwriting path you are on , automated or manual, and ask what that means for your ratios.Ask your lender what their overlay is , in writing. Not the FHA minimum. Theirs.If an overlay is the obstacle, that is a reason to change lenders, not to give up. A broker can move the file. A single bank cannot.Fix the credit before you shop, not after. Credit work done before a file is structured changes which programs exist for you. See Fix the Credit First .Get fully underwritten rather than pre-qualified , so a human has read your documents before you are in contract. See Pre-Qualified, Pre-Approved, Underwritten .Why bring this file to us
We quote the handbook with the section and the date , not from memory. Every guideline on this site carries its citation and when it was last verified, and says so when it is getting old.We tell you the overlay, not just the rule. The published floor and what investors actually do are two different numbers, and only one of them decides your file.Broker model. When one investor's overlay is the obstacle, we move the file rather than tell you no.You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999 and a 2025 Presidents Club Winner at CMG Home Loans. Direct line: (480) 999-9842.EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile , the Scottsdale branch , and the license itself at NMLS Consumer Access . Hold every lender to that standard, including us.
Call before you shop, not after you are in contract. Most of what goes wrong in an FHA file was decidable in week one.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. FHA is a mortgage insurance program administered by the Department of Housing and Urban Development; loans are made by approved lenders, not by HUD or FHA. Guideline requirements are set out in HUD Handbook 4000.1 and change over time, and individual investors frequently impose requirements stricter than the published minimums. Nothing here is a substitute for the current handbook or for an underwriting decision on your specific file. Rates, terms and program guidelines change and depend on credit approval, property appraisal and other qualifying factors. Not all applicants will qualify. This is not legal or tax advice.
About Ricky Khamis President, EPiQ Lending · NMLS #173141 · 7975 N. Hayden Road, Suite A-101, Scottsdale, AZ 85258 · (480) 999-9842
Certified Mortgage Planning Specialist (CMPS), Certified Divorce Lending Professional (RCS-D), Certified Value Added Specialist (CVAS)
82nd Airborne Division, U.S. Army, 1992 to 1995 · Lending in Arizona since 1999 · Author of Just Win The Day · Host of the Life Mastery Unleashed podcast
Licensed in AZ, CA, CO, FL, NV, TX, UT, IN.
2025 Presidents Club Winner, CMG Home Loans My advice makes a difference.
Verify: EPiQ profile · Scottsdale branch · NMLS Consumer Access . Cite as: Khamis, R. (2026). "FHA Loans in Arizona: What the Handbook Says and What Lenders Actually Do." rickykhamis.com.
Looking at a specific home? Send me the address and I will run the numbers: rickykhamis.com/analyze
