FHA loan basics — the program in plain English
The Federal Housing Administration does not lend money. HUD insures loans that private lenders originate, which lets those lenders accept lower credit scores, smaller down payments, and higher debt-to-income ratios than they would on a conventional loan. That insurance has a price — paid by you, as MIP — but for many Northeast Florida buyers it is the difference between owning a home now and renting for two more years.[1]
Three numbers anchor the program:
- 3.5% minimum down payment with a 580+ middle credit score. Below 580 (down to 500) requires 10% down — uncommon, but possible.
- Upfront MIP of 1.75% of the loan amount, financed into the loan.
- Annual MIP of 0.55% for most 30-year FHA loans above 90% LTV. Paid monthly. Stays for the life of the loan unless you refinance.
2026 FHA loan limits in Northeast Florida
HUD publishes county-by-county FHA mortgage limits each year. The Jacksonville MSA is classified above Florida's baseline because of the metro's higher median home prices. For 2026, the four-county FHA limits are:[2]
| County | 1-unit | 2-unit (duplex) | 3-unit | 4-unit |
|---|---|---|---|---|
| Duval | $580,750 | $743,400 | $898,550 | $1,116,750 |
| Clay | $580,750 | $743,400 | $898,550 | $1,116,750 |
| St. Johns | $580,750 | $743,400 | $898,550 | $1,116,750 |
| Nassau | $580,750 | $743,400 | $898,550 | $1,116,750 |
All four counties share the Jacksonville MSA limit. By contrast, Florida's statewide FHA baseline (rural and low-cost counties) sits at $541,287 for a single-family home in 2026. The Jacksonville $580,750 limit covers the overwhelming majority of homes our first-time buyers are looking at.
Eligibility, DTI, and what underwriting actually looks at
Credit score
FHA's official minimum is 580 for the 3.5% down option, 500 with 10% down. In the real Jacksonville lending market, most lenders prefer 620+ for clean approvals, and some impose their own credit overlays at 640 or 660. If your middle score is 580–619, ask for a lender comfortable with FHA "manual underwriting" — they exist, but you have to find them.
Debt-to-income (DTI)
FHA standard is 43% combined housing + total debt ratio under manual underwriting. With automated approval through HUD's TOTAL Scorecard plus strong compensating factors (660+ credit score, large reserves, residual income), DTI can stretch to 50% or even up to 56.99%.[3] Most Jacksonville FHA approvals land in the 43–50% range. The buyers I see denied on DTI are usually fighting student loans, a car payment, and a credit card balance simultaneously — paying down one of those before applying often does more for the approval than a credit-score change.
Employment and income
Two-year work history standard. Job gaps are allowed if explained. Self-employed buyers need two years of tax returns. Bonus and commission income must be documented over a two-year average.
Residency and property type
FHA requires the home to be your primary residence within 60 days of closing. Owner-occupied 1- to 4-unit properties are allowed. Investment properties and second homes are not eligible.
FHA mortgage insurance — the part that bites
Two MIP components:[4]
Upfront MIP (UFMIP)
1.75% of the loan amount, paid at closing. Almost always financed into the loan, so on a $290,000 base loan, the UFMIP of $5,075 gets added — the actual loan funds at $295,075. You pay it back over 30 years with the rest of the mortgage.
Annual MIP
For a 30-year FHA loan with less than 5% down (the typical 3.5%-down scenario), annual MIP is 0.55% of the loan balance, paid monthly. On the $295,075 example, that is about $135/month. That payment is added to your principal, interest, taxes, and insurance — so your "PITI" actually becomes "PITIA" (with the annual MIP component).
How long you pay annual MIP
- Loans originated before June 3, 2013: Drops at 78% LTV after 5 years.
- Loans originated June 3, 2013 or later with less than 10% down: Annual MIP stays for the life of the loan.
- Loans originated June 3, 2013 or later with 10% or more down: Annual MIP drops after 11 years.
Practical translation: if you put 3.5% down on an FHA loan in 2026, you will pay annual MIP every month until you refinance to a conventional loan or pay the FHA loan off. That refinance becomes the financial planning event after you have built ~20% equity and your credit score has climbed.
FHA vs Conventional — the honest comparison
| FHA | Conventional (97%) | |
|---|---|---|
| Min credit | 580 (3.5% down); 500 (10% down) | 620 minimum; 660+ preferred |
| Min down payment | 3.5% | 3% (first-time) or 5% standard |
| Mortgage insurance | 1.75% upfront + 0.55% annual; life of loan in most cases | PMI by risk grade; drops at 78–80% LTV |
| DTI ceiling | Up to 56.99% with strong factors | Typically 45%, up to 50% with strong factors |
| Appraisal | Held to FHA Minimum Property Standards | Value-only appraisal; less restrictive |
| Condo eligibility | Project must be FHA-approved | Standard condo project review |
| Best for | Credit 580–680, limited savings, older or imperfect home | Credit 700+, 20% down available, condo not FHA-approved |
The decision usually comes down to two questions: What is your middle credit score? and How much cash can you bring to closing? If you are 580–680 with 3–5% down, FHA almost always wins. If you are 720+ with 10–20% down, conventional usually wins. The middle ground (680–720 with 5–10% down) deserves a side-by-side worksheet from your lender.
The FHA 203(k) renovation loan — buy a fixer with one loan
The 203(k) program lets you finance the purchase and the renovation in a single FHA loan. Two versions:[5]
203(k) Limited
Up to $75,000 in renovation costs (raised from $35,000 in late 2023). For non-structural repairs and improvements — paint, flooring, kitchen and bath updates, appliances, roof, HVAC, plumbing fixtures. No 203(k) consultant required. Repairs must be completed within 9 months. Best for cosmetic-to-moderate updates on a livable home.
203(k) Standard
For larger projects including structural repairs, additions, foundation work, and homes that are not currently habitable. Requires a HUD-approved 203(k) consultant. Minimum $5,000 in repairs. The same county FHA loan limit ($580,750 in Duval/Clay/St. Johns/Nassau) applies to purchase + renovation combined.
In Jacksonville, the 203(k) program shines on Springfield restoration projects, older Riverside cottages, and dated Westside ranches that need a kitchen, HVAC, and roof to be livable. The trade-off is a longer close (60–90 days vs 30–45 for a standard FHA) and a contractor-bid process that adds complexity.
Older Jacksonville homes and the FHA appraisal
The FHA appraisal is a hybrid value opinion and Minimum Property Standards inspection. On older NE Florida housing stock — common in Riverside, Avondale, Murray Hill, Springfield, North Beach, parts of Arlington, Mandarin's older sections, and the historic Westside — the same flags come up over and over:
- Peeling or chipping paint on pre-1978 homes (lead-based paint hazard). All deteriorated surfaces must be stabilized before closing.
- Missing handrails on stairs of 3+ steps or open-side stair runs.
- Roof condition — FHA requires a roof with at least 2 years of remaining useful life. Older 3-tab shingle roofs near end-of-life are the most common deal pressure point.
- Active leaks at the roof, plumbing, or windows.
- GFCI outlets missing in kitchen, bath, garage, exterior.
- Wood rot on fascia, soffits, window sills, exterior trim.
- Open electrical panel issues — Federal Pacific or Zinsco panels often flagged.
- Septic system condition on unsewered streets in older Mandarin, Westside, Arlington.
The playbook for these flags: get a full home inspection first (separate from the appraisal). When the FHA appraisal comes back with required repairs, you negotiate the seller to fix them or credit you to fix them. If the seller refuses both, you walk — but knowing the likely list before writing the offer lets you negotiate it into the contract upfront.
This is where local experience matters. I've been writing FHA contracts on Jacksonville's older neighborhoods for nearly 30 years. The list of repairs an FHA appraiser will flag on a 1948 Riverside bungalow is predictable — and the contract language to handle it is too.
What's next
FHA pairs cleanly with the Florida Hometown Heroes Program for public-service buyers — that combination puts an eligible Jacksonville teacher, nurse, or first responder into a home with 3.5% down funded by state assistance. For first-time buyers who do not qualify for Hometown Heroes, FHA standalone is still the workhorse. See the Buyers guide for the broader process and the Duval County guide for neighborhood-specific tax and insurance math.