FHA financing can allow 3.5% down with a credit score of at least 580, subject to lender approval. Lee County's 2026 one-unit base mortgage limit is $541,287, not a maximum purchase price. Include upfront and annual mortgage insurance when comparing the total payment with other loan options.
What Is an FHA Loan?
FHA loans are government-backed mortgages insured by the Federal Housing Administration. They're designed to make homeownership accessible to buyers who may not qualify for conventional loans due to lower credit scores or limited down payment savings.
Lee County's 2026 one-unit base loan limit is $541,287, not a purchase-price ceiling. A qualifying $350,000 purchase with 3.5% down requires a $12,250 down payment, before closing costs and prepaid expenses. The lender also reviews your income, appraisal and property eligibility.
FHA Loan Pros & Cons
Pros
- Low down payment — only 3.5% with 580+ credit score
- More lenient credit requirements (580 minimum)
- Higher debt-to-income ratios accepted
- Seller can contribute up to 6% toward closing costs
- Available for first-time and repeat buyers
- Competitive interest rates
Cons
- Annual MIP lasts 11 years at original LTV of 90% or less; otherwise the loan term
- Upfront MIP of 1.75%, payable at closing or financed
- Property must meet FHA minimum standards
- Loan limits apply ($541,287 in Lee County for 2026)
- Primary residence only — no investment properties
FHA vs. Other Loan Types
| Feature | FHA Loan | Conventional | VA Loan |
|---|---|---|---|
| Min Down Payment | 3.5% | 3-5% | 0% |
| Credit Requirements | 580 for 3.5% down; lender overlays apply | Varies by underwriting method and lender | Lender requirements apply |
| Mortgage Insurance | 11 years or loan term by original LTV | Cancellation request at 80%; automatic at scheduled 78%, with conditions | None |
| Debt-to-Income Review | Underwriting and lender requirements | Underwriting and lender requirements | Underwriting, residual income and lender requirements |
| Property Types | 1-4 units | 1-4 units | 1-4 units |
FHA Property Requirements
FHA properties must meet HUD's minimum requirements for safety, soundness and security. Roof condition, utilities, access and potential lead-based paint hazards can affect eligibility or require repairs. Ask the lender and appraiser about the specific home; an FHA appraisal is not a substitute for an independent home inspection.
Frequently Asked Questions
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