FHA loans for students: Guidelines

Quick insights

• Buying a home as a student or recent graduate could be achievable with an FHA loan.
• FHA mortgage loans allow applicants to qualify with a credit score as low as 580 and a down payment as low as 3.5%.ec-fha-loan-requirements-2025
• Proof of current or future employment is essential for those applying for an FHA loan, including students.

Buying a home as a student or recent graduate might sound like a stretch, but with an FHA loan, it could be more achievable than you think. Designed to make homeownership accessible, FHA loans offer flexible qualification standards that typically work in favor of first-time homebuyers and borrowers with limited credit history. For students, understanding how these loans treat factors like employment status, credit scores and student loan debt is critical.

Understanding FHA student loan guideline

For students and recent grads eager to take their first step into homeownership, FHA loans can offer a practical and accessible path forward. These loans are known for their flexible qualification requirements, but student loan debt still plays a big role in the approval process, especially when it comes to your debt-to-income (DTI) ratio. DTI compares your monthly debt payments to your gross income.

The mortgage has to use either of the following for outstanding student loans, regardless of the payment status:

• The payment amount reported on the credit report or the actual documented payment (when the payment amount is above zero)
• 0.5% of the outstanding loan balance (when the monthly payment reported on the borrower’s credit report is zero)ec-handbook-40001

This means that deferred loans aren’t ignored, and they can still influence your eligibility.

Qualifying for an FHA loan as a student

If you’re a student or recent graduate, qualifying for an FHA loan is possible, as long as you meet important criteria, including:ec-fha-loan-requirements-2025

• Steady employment or proof of future employment, such as a job offer starting within 60 days of closing
• Minimum credit score of 580 to qualify for the 3.5% down payment option
• Down payment as low as 3.5% of the home’s purchase price
• Debt-to-income (DTI) ratio between 43% and 50%, including student loan payments

Potential benefits and challenges of FHA loans for students

FHA loans come with several advantages tailored to first-time homebuyers and students, but there are also potential challenges.

Benefits:

• Lower credit score requirements than conventional loans.ec-fha-vs-conventional-loans
• Down payments as low as 3.5%.ec-fha-loan-requirements-2025
• Gift funds from family or friends can be used toward down payments and closing costs.

Challenges:

• Deferred student loans are still included in your DTI calculation, which can impact eligibility.
• FHA loans require an upfront mortgage insurance premium (UFMIP).
• Annual mortgage insurance premiums (MIP) are required for the life of the loan in most cases.

Mortgage options for homebuyers with student loans

There are several mortgage options available for homebuyers with student loans. Here's a breakdown of common options and what to know:

FHA loans:

• Down payment: 3.5%.ec-fha-loan-requirements-2025
• More flexible with credit scores (as low as 580).ec-fha-loan-requirements-2025
• Student loans in deferment or forbearance are calculated at 0.5% of the balance, unless a documented payment is provided.
• UFMIP and the monthly/annual mortgage insurance premium are required.

Fannie Mae HomeReady^®:

• Down payment: as low as 3%.ec-homeready-mortgage
• Designed for low- to moderate-income borrowers.
• Accepts rental income to help with qualification.
• Allows income-driven payment (IDR) student loan payments to calculate DTI.
• Generally, the income limit is 80% of the AMI for the property’s location.
• PMI for borrowers who put down less than 20%.

Freddie Mac Home Possible^®:

• Down payment as low as 3%.ec-home-possible
• Similar to HomeReady^® with slightly different credit score requirements.
• Designed for first-time and low- to moderate-income buyers.
• Generally, the income limit is 80% of the AMI for the property’s location.ec-home-possible
• PMI for borrowers who put down less than 20%.

VA loans (for veterans, active-duty military or eligible spouses):

• Down payment: 0%.
• No mortgage insurance.
• Student loans in deferment: Lenders calculate 5% of the balance divided by 12, unless you prove a lower payment.ec-va-home-loan-chances

Please note that Chase does not offer Fannie Mae HomeReady or Freddie Mac Home Possible loans.

In summary

FHA loans can be an option for students and recent graduates who are ready to become homeowners. By understanding how student loan debt impacts eligibility, you can better prepare for the application process. If you’re ready to start the homebuying process, consider contacting a Home Lending Advisor. Chase is an approved FHA-loan provider.