Current FHA guidelines, updated from one source.
Read these as program parameters, not an offer: the minimum investment, the credit score for maximum financing, the mortgage insurance premiums, and the ratios, all from one guideline source that this page refreshes from.
Up to 96.5% loan-to-value on a purchase
HUD sets the minimum required investment at 3.5% of the lesser of the price and the appraised value, which puts the purchase loan at up to 96.5% loan-to-value; the entire investment may come from an acceptable gift.
Decision score for maximum financing
The program opens at a 580 decision score for maximum financing; borrowers without a usable score are eligible under manual underwriting on non-traditional credit, and the ratios then follow the manual ladder below.
Plus 0.50%–0.55% a year on most thirty-year loans
FHA mortgage insurance has two parts: 1.75% upfront, which is added to the loan, and an annual premium of 0.50%–0.55% on most thirty-year loans, charged monthly; the ladder below shows the schedule by loan size, leverage, and duration.
Housing and total debt, manual reference
31/43 is the starting point: the housing payment and the total debt as shares of effective income. Cash reserves, a minimal payment increase, or residual income stretch the ratios tier by tier, up to 40/50 with two factors.
| Decision score | Housing / total | Compensating factors |
|---|---|---|
| 500–579 or no credit score | 31% / 43% | not applicable — ratios may not exceed 31/43 (energy efficient homes 33/45) |
| 580 and above | 31% / 43% | no compensating factors required (energy efficient homes 33/45) |
| 580 and above | 37% / 47% | one of: verified and documented cash reserves; minimal increase in housing payment; residual income |
| 580 and above | 40% / 40% | no discretionary debt |
| 580 and above | 40% / 50% | two of: verified cash reserves; minimal increase in housing payment; significant additional income not reflected in effective income; residual income |
| Base loan | Leverage | Annual premium | Duration |
|---|---|---|---|
| Standard base loan amounts | at or below 90% LTV | 0.50% | 11 years |
| Standard base loan amounts | above 90% to 95% LTV | 0.50% | mortgage term |
| Standard base loan amounts | above 95% LTV | 0.55% | mortgage term |
| Larger base loan amounts | at or below 90% LTV | 0.70% | 11 years |
| Larger base loan amounts | above 90% to 95% LTV | 0.70% | mortgage term |
| Larger base loan amounts | above 95% LTV | 0.75% | mortgage term |
Refinances: rate-and-term to 97.75% loan-to-value on a home occupied for the past year; cash-out to 80% after twelve months of ownership and occupancy; streamline refinances of an existing FHA loan without an appraisal. Sellers and other interested parties may contribute up to 6% of the price toward closing costs; the entire minimum investment may be a gift.
Current FHA snapshot · updated October 1, 2026 · owner-occupied principal residences, one to four units · county loan limits apply — ask a Lendmire loan officer for the limit where you are buying · FHA loans are assumable · Lendmire is not affiliated with FHA or HUD.
For informational purposes only. This is not a commitment to lend or extend credit, an offer, or a quote. Program parameters shown are FHA guidelines and wholesale lender overlays, are subject to change without notice, and every figure depends on the borrower, the property, the selected program, and full underwriting. The rate, the payment, and any costs for a specific loan are provided in writing by a licensed loan officer. County loan limits apply and are confirmed by a loan officer. Licensed in sixteen states for consumer mortgages. Lendmire is not affiliated with or acting on behalf of FHA, HUD, or the federal government. Lendmire, LLC, NMLS #2371349. Equal Housing Opportunity.
What an FHA loan is — and how the file is qualified.
An FHA file in Memphis is built from four pieces: the minimum required investment, the decision score, the mortgage insurance, and the qualifying ratios. Each has a rule, and each rule has a reason, which the cards below explain.
For the program overview, see Lendmire’s FHA loan program, or the statewide guide at FHA Loans in Tennessee.
The minimum required investment
The minimum investment is the part of the price the loan does not cover, measured against the lower of price and value. A Memphis buyer can bring it from savings or from an acceptable gift, and a seller can contribute toward closing costs within HUD’s limit, which keeps the cash to close small.
The decision score sets the leverage
The score threshold opens maximum financing, but the file is read as a whole: payment history, seasoning after any bankruptcy or foreclosure, and the reasons behind a derogatory event. A Memphis buyer with a recovered profile is the program’s intended borrower.
Two premiums: upfront and annual
Mortgage insurance is the price of the leverage. HUD sets both premiums by schedule rather than by credit score, which is why a Memphis buyer with a modest score pays the same premium as one with a strong score; a conventional loan with private insurance prices the score, which is the comparison worth running.
Qualifying ratios and compensating factors
Effective income is the income the lender can document as stable and likely to continue, and the ratios are measured against it. A Memphis buyer with a modest score is held to the base ratios; above the maximum-financing score the compensating factors open the higher tiers.
The result is an estimate, not a decision: the appraisal may land below the contract price, the lender sets the rate at lock, and the ratios are measured on effective income. What does not change is the program structure the calculator reproduces.
Where Memphis’ first-time and moderate-income buyers shop — and how FHA fits.
The Census figures below are the Memphis backdrop for an FHA loan: ownership, value, and income. They are context for sizing, not inputs to a credit decision, which rests on the appraisal and the file.
Read the figures as backdrop. Household income matters for the ratios, value for the investment and the premium, and the county limit for the ceiling; the Census tells you the market, the file tells you the loan.
Data sources: U.S. Census Bureau — ACS 5-Year (2024) housing and population estimates, including tenure, home values, gross rents, and household income.
Distinct Memphis neighborhoods, distinct FHA files.
Memphis is not one FHA picture. The neighborhoods below hold different housing stock, different price points, and different property questions, and each shapes how an FHA file is built there.
Established close-in neighborhoods
Older Memphis homes are well inside the program, with one recurring question: HUD’s minimum property requirements. A home that needs repairs to meet them closes after the repairs or through a repair escrow where permitted. Median household income in Memphis sits near $51,736 on the latest Census estimate.
Two-to-four-unit homes
Small multi-unit homes are a Memphis specialty, and the program takes them with a higher county limit and HUD’s rules for counting the rent. The buyer’s occupancy of one unit is the condition that makes it an FHA file. The median owner-occupied home value in Memphis runs near $169,000 on the latest Census estimate.
Condominiums and townhomes
In Memphis, a condominium near the job is the first home many buyers can reach; the program pairs with it as long as the project clears HUD’s review or the unit qualifies on its own, and the file is otherwise the same as for a house. Memphis counts a population near 619K within the Memphis, TN-MS-AR area.
Newer infill and recent construction
Newer Memphis homes rarely draw repair findings, so the file turns on the loan amount against the county limit and on the ratios at the higher price. A loan officer confirms the limit before the contract is written. About 55% of Memphis’ households rent — roughly 139,512 renter households on the latest Census estimate.
Historic districts
Older Memphis homes being restored carry two questions on an FHA file: the condition the appraiser finds today, and whether the work needed to meet HUD’s standards can be done before closing or through an escrow. Roughly 113,608 Memphis households own their homes on the latest Census estimate — 45% of all households, the pool an FHA purchase joins.
Higher-value homes
A high-value Memphis purchase can still be an FHA file when the loan amount fits under the county limit; above it, the program’s leverage is not available and the comparison with conventional financing decides. On a home at Memphis’ median value, the FHA minimum investment comes to about $5,900 — the cash the program asks a buyer to bring before closing costs.
Each submarket has a typical property story, but the appraisal is the one that counts. HUD’s property standards, the occupancy rule, and the ratio ladder are the same on every Memphis file.
Four ways Memphis buyers put an FHA loan to work.
Memphis borrowers use FHA for a handful of reasons that repeat: the first purchase with a small investment, the purchase on a recovering credit profile, the refinance of an existing FHA loan, and the cash-out refinance on a home with equity.
Buy on a recovering credit profile
A Memphis buyer whose credit has recovered from a bankruptcy, a foreclosure, or a stretch of late payments can qualify once the event is seasoned under HUD’s rules and the recent history is clean; the decision score sets the leverage and the ratios follow the manual ladder.
Refinance an existing FHA loan
The streamline refinance is the simplest shape in the program: no appraisal, no full credit review, a net tangible benefit, and the existing FHA loan’s payment history as the main test. Many Memphis owners use it when the market moves in their favor.
Take cash out of a home with equity
An FHA cash-out refinance lets a Memphis owner who has lived in the home for the past year borrow against equity up to the program’s cash-out leverage, with the upfront and annual premiums applying to the new loan; a HELOC that leaves the first mortgage alone is the comparison worth running.
Buy a small multi-unit home and live in one unit
A duplex, triplex, or fourplex in Memphis is an FHA purchase when the buyer occupies one unit. The investment is the same small share of the price, and the rental income from the other units is documented toward the ratios under HUD’s multi-unit rules.
Estimate the FHA payment on a Memphis price before requesting a quote.
This estimator runs the program’s own math on your Memphis inputs: price less the investment, plus the financed premium, amortized at the benchmark rate, with the monthly premium and escrows added. A licensed loan officer provides the actual rate, payment, and costs in writing.
Memphis FHA payment estimate
Seeded from Memphis’ median value at the program minimum; every field is editable and the result updates as you type.
Editable benchmark: 7.03% as of September 24, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not an FHA loan quote.
Illustrative starting assumptions: a $170,000 price near Memphis’ median owner-occupied home value (kept where an FHA loan is realistic in most counties), the FHA minimum investment as the down payment, a thirty-year term at the current Freddie Mac benchmark, property taxes and insurance estimated for Tennessee (U.S. Census Bureau). Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not an FHA loan quote; your rate is set by the lender at lock. FHA mortgage insurance follows HUD’s published schedule for the term, leverage and loan size entered; taxes, insurance and dues are editable estimates; closing costs are not included; county loan limits are not checked here. Licensed in sixteen states for consumer mortgages. Lendmire is not affiliated with or acting on behalf of FHA, HUD, or the federal government.
Same buyer, three very different closings.
Before deciding on FHA, it helps to see what it is not: not the only low-down-payment route, not the only forgiving-credit route, and not the cheapest insurance for a strong profile. The comparison below puts the three next to each other for a Memphis buyer.
FHA, conventional with mortgage insurance, or VA.
A small minimum investment that a gift can cover, a forgiving decision score, ratios that stretch with compensating factors, and HUD insurance priced by schedule rather than by score. The annual premium on a full-leverage thirty-year loan lasts for the term; many borrowers refinance out of it later.
Where FHA charges by schedule, conventional charges by score. A Memphis buyer with strong credit and a small down payment may find the private premium smaller and the payment lower; a buyer with a modest score will not. See Lendmire’s conventional loan program.
A Memphis buyer with VA eligibility rarely needs FHA: the VA loan carries no down payment and no monthly insurance, and the funding fee is the only program cost. FHA is the fallback where entitlement is used up or the property does not fit. See Lendmire’s VA loan program.
The decision is rarely close once the profile is known. FHA tends to fit the modest score, conventional the strong score with equity to come, and VA nearly any file with eligibility. The comparison is run on the actual numbers, in writing.
What to prepare for a Memphis scenario review.
Most of this is standard mortgage documentation; have these ready for a Memphis review all the same.
This is a general preparation guide, not a universal checklist. The selected lender may request additional information based on the transaction, the property, the credit profile, and the income picture. Nothing here is legal or tax advice.
Local details that can change the loan.
Here is what moves a Memphis file: the decision score, the premium schedule, the appraisal and the property standards, the project approval, the county limit, the ratios, and the seasoning after a credit event.
Use these checks to keep the Memphis file clean and fundable.
A clean Memphis file answers three questions in advance: what decision score, what premium schedule, and whether the property is inside HUD’s rules and the county limit.
- Confirm the score: the lender’s report sets the decision score, the lowest middle score among the borrowers.
- Know the premium: at full leverage the annual premium runs for the term of a thirty-year loan.
- Plan the units: up to four units at the same minimum investment when the buyer occupies one.
The decision score decides the leverage
Two borrowers, two sets of scores, one decision score: the lowest of the middle scores. A Memphis couple with one weak file is read on that file, which is why the score is confirmed from the lender’s report before anything is sized or any offer is written.
How long the annual premium runs
Unlike private mortgage insurance, the FHA annual premium does not cancel as the home gains value. On a Memphis full-leverage loan the exit is a refinance; the calculator shows the premium’s rate and duration for the leverage entered.
Two- to four-unit homes and rental income
Three- and four-unit homes carry an extra test on an FHA file: the property’s rents must cover the payment to HUD’s standard. A Memphis buyer eyeing a fourplex should have the lender run the test before writing the offer.
Seller contributions and the minimum investment
Two sources, two rules: the minimum investment comes from the buyer or a gift, never the seller; closing costs can come from the seller up to the limit. Structured that way, a Memphis purchase can close with cash to close near the investment alone.
The county loan limit
The county limit is a ceiling on the loan amount, not on the price. A Memphis buyer shopping above it either brings the difference as a larger investment or moves to a conventional loan; ask a loan officer for the limit in the county where you are buying.
From a Memphis pre-approval to keys in hand.
Four steps, each with an FHA rule inside it: the pre-approval, the appraisal, the underwriting, and the closing. Here is the Memphis path.
Pre-approval
A Memphis pre-approval is a sizing exercise: the score, the income, the investment, and the county limit. The loan officer confirms eligibility against the program rules and puts the pre-approval in writing for the offer.
Contract and appraisal
With the contract signed, the lender orders an appraisal from an FHA Roster appraiser, who values the Memphis home and checks it against HUD’s property standards. Seller contributions are checked against the program’s limit, and any condominium project approval is confirmed.
Underwriting
An automated approval follows the system’s finding; a manual file follows the ratio ladder. Either way, the Memphis underwriter verifies the income, the assets, the credit history, and the property, and issues the approval with its conditions.
Closing
At closing the upfront premium is added to the loan, the escrows for taxes and insurance are set up, and the annual premium begins with the first payment. A Memphis buyer signs the note and the security instrument, occupies the home within HUD’s window, and the loan is insured.
A brokerage that matches the program to the buyer.
A brokerage sees several wholesale programs and all three government and agency routes; a single lender sees its own. For a Memphis buyer that difference shows up in which program is recommended, because Lendmire runs them side by side and says which one costs less.
Three programs, one set of numbers
The comparison on this page is run for real on every Memphis file: the FHA structure next to conventional with private insurance and, where eligibility exists, VA. The written terms follow the comparison.
The premium explained before the offer
No Memphis buyer should learn at the closing table that the premium lasts for the term. The loan officer walks through the upfront premium, the annual premium, and the duration for the leverage chosen, and shows the conventional alternative on the same numbers.
Licensed, consumer-purpose, in writing
The parameters on this page are HUD’s and the wholesale overlays’; the terms for a specific Memphis loan come from a licensed loan officer, in writing, after the review. Lendmire is a broker, never the lender, and not affiliated with the federal government.
Trusted by first-time buyers & families alike.
Memphis FHA loan FAQs
Plain answers to the questions Memphis buyers ask most about FHA loans, in the order they usually ask them.
What is an FHA loan, and who is it for?
Think of it as a conventional mortgage with a federal insurance policy attached. The policy costs a premium, and it buys a smaller investment, a lower score threshold, and more room in the ratios than the agencies allow. Owner-occupied homes only, up to four units.
How much do I need to put down on an FHA loan in Memphis?
HUD sets the minimum investment as a small share of the price or value, whichever is lower; the snapshot and the calculator show it on a Memphis price. The whole investment can be a gift from a family member or another acceptable donor.
What credit score do I need for an FHA loan?
The threshold in the snapshot, read as the lowest middle score among the borrowers. Below it HUD allows a reduced-leverage loan, but the programs Lendmire places FHA loans with begin at the threshold. A thin or non-traditional credit file can qualify under manual underwriting.
How does FHA mortgage insurance work, and how long do I pay it?
The upfront premium is added to the loan at closing; the annual premium is part of every payment. How long the annual premium lasts depends on the leverage at origination: eleven years when the loan starts at or below ninety percent of value, otherwise the life of the loan. The snapshot ladder shows the schedule.
What is the FHA loan limit in Memphis?
There is a county limit, and it is the first thing confirmed on a Memphis file near the top of the market. The loan officer provides the current figure; above it the options are a larger investment or a conventional loan.
Is an FHA loan assumable?
Yes, with the lender qualifying the assumptor. It is one of the program’s quieter advantages for a Memphis owner who may sell into a higher-rate market.
Can I combine an FHA loan with down payment help?
Yes. HUD allows approved secondary financing to fund the investment, and the Down Payment Assistance program page describes the options that pair with an FHA first lien in Tennessee.
Should I choose FHA or a conventional loan?
Run both. A modest score and a small down payment usually point to FHA; a strong score points to conventional, where the private insurance is smaller and cancels as equity grows. The comparison is made on the actual payment and the cash to close.
Can I get an FHA loan after a bankruptcy or foreclosure?
The program seasons credit events rather than barring them. Each event has its own waiting period under HUD’s rules, a documented hardship can shorten some of them, and a Memphis buyer with a seasoned event and two clean years is inside the rules.
Can the down payment be a gift?
Yes, for all of it. The donor must be acceptable under HUD’s rules, the letter must state no repayment is expected, and the transfer must be documented; the seller cannot be the source of the investment.
Run the Memphis FHA numbers, then get the terms in writing.
Start with a scenario review: the price, the down payment, the decision score, and the income. A licensed Lendmire loan officer runs FHA against conventional and VA on the same numbers and provides the terms in writing.
This guide covers Memphis — for the statewide guidelines, markets, and scenarios, see FHA Loans in Tennessee, part of Lendmire’s FHA loan program.
Nearby markets in Tennessee: Clarksville · Nashville · Murfreesboro · Chattanooga · Knoxville
Related programs: Down Payment Assistance · FHA 203(k) Rehab Loans · Conventional Loans