FHA loans have been a gateway to homeownership for millions of Americans, especially first-time buyers and those rebuilding credit. With a minimum 3.5% down payment and credit scores accepted as low as 580, FHA opens doors that conventional financing might close. In King County's competitive market, FHA buyers can still be competitive when they come to the table with strong pre-approval and the right offer strategy.
King County FHA Loan Limits for 2026
FHA loan limits are set by county and updated annually. For King County in 2026:
- Single-family home: $1,063,750
- Duplex: $1,361,800
- Triplex: $1,646,100
- Fourplex: $2,045,700
King County's limit matches the conforming loan limit because it's designated as a high-cost area. This means FHA financing is available for most Seattle homes priced under approximately $1.10M (at 3.5% down).
Down Payment Requirements
| Credit Score | Minimum Down Payment |
|---|---|
| 580 or higher | 3.5% |
| 500-579 | 10% |
| Below 500 | Not eligible |
While FHA guidelines allow scores down to 500, most lenders have overlays requiring 580-620 minimum. Julie works with lenders who offer competitive FHA products across the credit spectrum.
FHA Mortgage Insurance Premium (MIP)
FHA loans require two types of mortgage insurance:
Upfront MIP (UFMIP)
1.75% of the loan amount, typically rolled into the loan. On a $700,000 loan, that's $12,250 added to your balance.
Annual MIP
For most borrowers putting 3.5% down, annual MIP is 0.55% of the loan amount, paid monthly. On a $700,000 loan, that's approximately $321/month.
MIP Duration
This is the key difference from conventional PMI: FHA mortgage insurance is required for the life of the loan when you put less than 10% down. To remove it, you must refinance into a conventional loan once you have sufficient equity and credit.
If you put 10% or more down, MIP can be removed after 11 years.
FHA vs. Conventional: When Does Each Make Sense?
| Factor | FHA | Conventional |
|---|---|---|
| Minimum credit score | 580 (or 500 with 10% down) | 620 |
| Minimum down payment | 3.5% | 3% (with income limits) |
| Mortgage insurance | Lifetime (if <10% down) | Removable at 80% LTV |
| DTI allowance | Up to 50%+ with compensating factors | Typically 45% |
| Property condition | Stricter requirements | More flexible |
When FHA Is the Right Choice
- Credit score 580-660: FHA is often more affordable than conventional at these scores
- Higher DTI ratio: FHA allows debt-to-income up to 50%+ in some cases
- Recent credit events: FHA has shorter waiting periods after bankruptcy (2 years) and foreclosure (3 years) than conventional
- Gift funds for entire down payment: FHA allows 100% gift funds with no borrower contribution required
- Lower income: No income limits unlike HomeReady/Home Possible
When Conventional May Be Better
- Credit score 720+: Conventional PMI will likely be cheaper than FHA MIP
- Planning to stay long-term: Conventional PMI removal saves money over time
- Buying a condo: FHA condo approval requirements are strict; many Seattle buildings aren't approved
- Buying a fixer: FHA property requirements may disqualify homes needing work
FHA Property Requirements
FHA loans require the property to meet HUD's Minimum Property Requirements (MPRs). The appraisal will flag issues like:
- Peeling or chipping paint (especially in pre-1978 homes)
- Broken windows or doors
- Roof damage or active leaks
- Exposed wiring or electrical hazards
- Foundation issues
- Health and safety hazards
If the appraisal flags issues, repairs must be completed before closing. This can complicate purchases of older Seattle homes that need updating.
FHA Condo Considerations
To use FHA financing for a condo, the building must be on the FHA-approved condo list or receive spot approval. Many Seattle condo buildings are not FHA-approved due to:
- Low owner-occupancy ratios
- Insufficient HOA reserves
- Pending litigation
- Commercial space exceeding 35%
If you're eyeing a specific condo, Julie can check approval status before you invest time in an offer.
Down Payment Assistance with FHA
FHA loans can be combined with Washington State programs like:
- WSHFC Home Advantage
- House Key Opportunity
- Seattle Housing Authority programs
These programs can cover part or all of your down payment and closing costs, making FHA financing accessible with minimal upfront cash.
Get Started with FHA
Julie can run a side-by-side comparison of FHA versus conventional financing for your specific situation. Often, the answer isn't obvious until you see actual monthly payments and long-term costs based on your credit profile.
Call (206) 778-5825 or send a message to start your pre-approval.