Your score came back in the low 600s, or there is a collection on the report you forgot about, and the last person you spoke to stopped returning calls.
What FHA is actually for
FHA is not a first-time buyer program, and nothing about it requires you to be one. It is mortgage insurance sold by the federal government to the lender, which lets the lender accept a credit profile and a down payment that conventional guidelines will not. That is the whole mechanism. Everything else follows from it.
The practical result is that FHA reaches three borrowers conventional financing frequently will not: the borrower with a thin or bruised credit file, the borrower with very little saved, and the borrower whose debt-to-income ratio needs more room than conventional underwriting allows. If none of those describe you, FHA is probably the wrong answer, and the section below on when conventional wins is the one to read.
The down payment tiers, and what sits behind them
With a credit score of 580 or above, the minimum down payment is 3.5%. Between 500 and 579 it is 10%. Below 500 there is no FHA loan.
The entire down payment may come from a gift, which is the quietest advantage in the program and the one that most often turns a renter into an owner. A documented gift from a family member can fund all of it. Conventional programs allow gifts too, but FHA pairs the gift allowance with the credit flexibility, and that combination is why the program exists.
Arizona is a community property state. On an FHA file that matters: the debts of a spouse who is not on the loan can still be counted in your ratio even though their income and credit are not. If you are married and buying alone, that is a conversation to have before you shop, not after.
The mortgage insurance rule that decides everything
FHA charges two premiums. An upfront premium, normally financed into the loan, and an annual premium collected monthly. The upfront one is a cost. The annual one is a decision, and almost nobody explains it before closing.
Under HUD Mortgagee Letter 2013-04, the rule that still governs current files, the annual premium runs for 11 years when the loan-to-value at origination is 90% or below, and for the full mortgage term when it is above 90%. The loan-to-value for this test is the base loan amount before the upfront premium is financed, divided by the lesser of the purchase price or the appraised value.
Read that against the down payment tiers and the trap is obvious. Put 3.5% down and you are at 96.5% loan-to-value, above 90%, and the monthly mortgage insurance never comes off. Put 10% down and you are at 90%, and it ends after 11 years. Same program, same borrower, and the only way off the premium in the first case is to refinance out of FHA entirely.
So the real FHA question is not whether you can get approved. It is what the exit looks like. For most buyers the honest plan is to use FHA to get into the house, build to 20% equity through payments and appreciation, and refinance into a conventional loan where the insurance terminates by law. That plan should be on the table at application, not discovered in year four.
One more wrinkle worth knowing if you already own: loans with case numbers assigned before 3 June 2013 followed older rules under which the premium could cancel. If you have an existing FHA loan, the case number date changes whether refinancing out is worth doing.
County loan limits, and why no number appears here
FHA limits are set county by county, adjusted annually, and calculated from area median home prices within a statutory floor and ceiling. The floor is 65% of the conforming baseline, which puts it at $541,287 for 2026. Maricopa County sits above the floor.
Published sources disagreed on the exact Maricopa figure for 2026 when this page was written, so none is printed here. Use HUD's own county lookup, or ask us and we will confirm it against the agency before you write an offer. A page that prints the wrong number confidently is worse than one that tells you where the right number lives.
The appraisal is a condition review, not just a value opinion
This is where FHA files die in the East Valley, and it has nothing to do with the borrower. An FHA appraiser is checking that the property meets minimum property standards: safety, security and soundness. The valuation is only half the assignment.
In practice, on homes built before the mid 1980s, that means peeling exterior paint, missing or loose stair and balcony handrails, a water heater without a proper temperature and pressure relief discharge line, exposed or spliced wiring, roof covering with no remaining service life, inoperable windows, and unpermitted enclosures. Pool fencing and barrier requirements come up constantly here. Any of these can become a condition that must be repaired before closing, and on a seller who will not repair, the deal is over.
None of that is a reason to avoid FHA. It is a reason to know, before you write, whether the house you picked is an FHA house. That is a fifteen minute conversation and it saves contracts.
When conventional is the cheaper answer
If your score is 680 or better and you can reach 5% down, run both. Conventional private mortgage insurance is priced off your score and your loan-to-value, it is frequently cheaper than FHA's annual premium at that credit tier, and by law it terminates. FHA's does not, above 90% loan-to-value.
Compare them over the number of years you will actually own the house, not over the first month. A payment that is slightly lower today and carries insurance for thirty years is not the cheaper loan. That comparison is the work, and it is the reason to price a file with someone who has access to both rather than someone selling one.
Where FHA fits across the East Valley
The program is federal. What it runs into is local: the age of the housing, the price point against the county limit, and whether the property is attached.
- Mesa. The oldest and largest housing stock in the East Valley, so Mesa files turn on the appraisal condition review rather than the credit file. Paint, handrails, water heater discharge lines and unpermitted Arizona rooms are the recurring findings. Price points sit comfortably inside the county limit, so the limit is rarely what binds here.
- Gilbert. Mostly built after the mid 1990s, so condition findings are uncommon. The live question is builder incentives, which are usually structured around a conventional loan with the builder's own lender. Price both before you accept the credit.
- Chandler. Credit profiles along the Price corridor tend to run higher, which means FHA frequently loses to conventional at 3% down once the mortgage insurance is compared across the years you will own the home rather than the first payment.
- Tempe. Attached housing is the Tempe market, and FHA requires the condominium project to be FHA approved or the individual unit to qualify under single-unit approval. That one check ends more Tempe FHA contracts than any borrower issue does. Verify it before you write.
- Scottsdale. FHA works in south Scottsdale and around Old Town, where price points stay under the county limit. North of the 101 the limit is usually the binding constraint rather than anything about the borrower.
- Phoenix. The widest price range of the eight cities. FHA reaches most of Phoenix comfortably. In Arcadia, the Biltmore corridor and the central historic districts the county limit is what runs out first.
- Queen Creek. New construction and larger parcels, well inside the county limit. The appraisal here also picks up septic systems and shared wells that simply do not exist in the tract subdivisions further west.
- Paradise Valley. Effectively outside the program. The county limit does not reach the entry price of this market, so a Paradise Valley purchase is a conventional, jumbo or portfolio conversation instead.
Common questions
Do I have to be a first-time buyer to use an FHA loan?
No. There is no first-time buyer requirement. FHA is a credit and down payment program, not a status program.
Does FHA mortgage insurance ever go away?
It depends on the loan-to-value at origination. At 90% or below the annual premium runs 11 years. Above 90%, which includes every 3.5% down file, it runs for the full mortgage term (HUD Mortgagee Letter 2013-04). The only exit above 90% is refinancing out of FHA.
Can my down payment be a gift?
Yes. A properly documented gift from an eligible source can fund the entire down payment, which is one of the most useful features of the program.
What credit score do I need?
580 reaches the 3.5% minimum down payment. 500 to 579 requires 10% down. Lenders may apply their own higher minimums on top of FHA's, which is one reason to work with a broker rather than a single lender.
Will the house I want pass an FHA appraisal?
Usually, but the appraiser reviews safety, security and soundness, not only value. On homes built before the mid 1980s the common findings are paint, handrails, roof life, wiring and pool barriers. Ask before you write the offer, not after.
I already have an FHA loan. Should I refinance out of it?
Frequently yes, if you are above 90% original loan-to-value and have built equity, because that premium does not terminate on its own. Check the case number date first: loans with case numbers assigned before 3 June 2013 followed different cancellation rules.
Does FHA have income limits?
No. FHA has no income limit and no income cap. People confuse it with USDA, which does have limits, and with down payment assistance programs, many of which do. FHA is a credit and down payment program, not a means-tested one.
Do I have to live in the house?
Yes. FHA insures owner-occupied housing, and that is the premise of the insurance rather than a technicality. There are narrow exceptions that allow a second FHA loan, mostly covering a genuine relocation or an outgrown home, and they are narrower than the internet suggests. Can you have two FHA loans at once?
Can I get an FHA loan after a bankruptcy or foreclosure?
Usually yes, and sooner than with conventional financing. The waiting period runs from the completion date rather than the filing date, which catches people out in both directions, and documented one-time circumstances outside your control can shorten it. Chapter 13 while still in plan is frequently possible and frequently not pursued. What the waiting periods require
How do student loans affect what I qualify for?
More than almost anything else in the file, because the monthly figure an underwriter counts is often not the payment you actually make. Deferred and income-driven plans are the cases to get right, and the treatment has changed. Ask your lender what figure they are using and why. How FHA counts student loans
Can I use FHA if I am self-employed?
Yes. The standard answer is two years of filed returns, and there is an exception for someone who did the same work as an employee first, which turns on documented prior experience in the same field. It is real and it is routinely missed. The same-industry exception
Can the seller pay my closing costs?
Yes, up to a cap that depends on the loan, and the same room also funds a rate buydown if you would rather have a lower payment than a lower price. Confirm the cap against your actual loan before anyone signs, because a concession over the limit gets cut back at underwriting. How concession caps work
Can I buy a condo with an FHA loan?
Yes, if the project qualifies or the individual unit does. Single-unit approval means an unapproved building is no longer automatically a dead end, though it takes lead time and not every lender will process one. Check the project before you write the offer. Condo and single-unit approval
Will collections or judgments stop me?
Not usually on their own, and paying an old collection is not automatically the right move. The item that actually stops FHA files is unpaid federal debt, including a defaulted federal student loan that fell off your credit report years ago and still shows in the federal screening. Raise it on the first call. Collections, judgments and federal debt
What is a manual underwrite and should I worry?
It means a human applies a stricter framework instead of the automated evaluation. Ratio limits tighten and compensating factors start to matter, which makes documented rent history and real reserves after closing the most valuable things in your file. It is the one situation where how your file is presented changes the outcome. Winning a manual underwrite
Is FHA or conventional cheaper for me?
It depends on your credit and how long you keep the loan, and the factor that usually decides it is how long the mortgage insurance lasts on each. Ask for both payments with the insurance line broken out, and the total over the period you realistically expect to hold, not over thirty years. How to actually decide
Why bring this file to us
- Broker model. Multiple investors rather than one bank's shelf, which is what a file needs when the first answer is no.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending and a Certified Mortgage Planner, NMLS #173141, originating mortgages since 1999. Direct line: (480) 999-9842.
- We price the alternatives against each other. Most lenders quote the program you asked for. The comparison is the work.
Looking at a specific home? Send me the address and I will run the numbers: rickykhamis.com/analyze
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Program rules, agency limits and pricing change, and every file depends on credit approval, property appraisal, income and asset verification and other qualifying factors. Not all applicants will qualify. Figures attributed to an agency above are cited with the issuing agency and the date they were published; confirm the current figure on your own file before you plan around it. Ricky Khamis, NMLS #173141. EPiQ Lending, NMLS #1936984, 7975 N. Hayden Road, Suite A-101, Scottsdale, AZ 85258. Verify any of this at NMLS Consumer Access, the EPiQ Lending profile or the Scottsdale branch page.