FHA financing exists for buyers whose credit or debt load makes a conventional approval difficult, and for buyers who simply want the lowest possible cash to close. The guidelines are set federally by HUD, so they are the same in New Hampshire, Massachusetts and Maine, what changes by state is the county loan limit and the property itself.
Core borrower requirements
- Credit score: 3.5% down is available at a 580 minimum score. Between 500 and 579, FHA allows 10% down, though many lenders set higher internal minimums.
- Down payment: 3.5% of the purchase price, and the entire amount may be a documented gift from an eligible source.
- Debt-to-income: more flexible than conventional; higher ratios are frequently approved with compensating factors such as reserves or a strong payment history.
- Employment and income: a stable two-year history, documented with pay stubs, W-2s and, for self-employed borrowers, tax returns.
- Occupancy: the home must be your primary residence. FHA is not for investment properties.
Mortgage insurance: the trade-off
Every FHA loan carries an upfront mortgage insurance premium, which is typically financed into the loan, plus an annual premium collected monthly. On most 30-year FHA loans with the minimum down payment, the annual premium stays for the life of the loan. That is the main reason a strong-credit buyer with 5% down is often better off on a conventional loan with cancellable PMI, and the main reason many FHA borrowers refinance out of FHA later.
County loan limits in NH, MA and ME
FHA caps the loan amount by county, and those caps are updated annually. Higher-cost counties, including the Boston metro area and the New Hampshire counties inside it, carry substantially higher limits than rural counties in northern New Hampshire or Maine. Check the current limit for the specific county you are buying in before assuming a price point works. Our areas we serve page lists the cities and towns we work in across all three states.
FHA pairs well with state down payment assistance. See first-time home buyer programs in NH, MA and ME for what is available.
Property requirements are where FHA files get tripped up
Our housing stock is old, and FHA appraisers apply minimum property standards. Common issues in New England:
- Peeling paint on homes built before 1978, which triggers lead-based paint repair requirements.
- Roofs with limited remaining life, active leaks, or missing flashing.
- Non-functional heating systems, the home must be able to be heated.
- Missing handrails, unsafe steps, or damaged exterior stairs and decks.
- Private well and septic systems, which have specific distance and testing requirements.
- Condominium projects, which must be FHA-approved or qualify under single-unit approval.
None of these are automatically fatal, but they need to be identified early so repairs can be negotiated before closing rather than discovered a week before the deadline.
Is FHA the right choice?
FHA is usually the strongest option when your credit score is under about 680, when your debt-to-income is elevated, or when your down payment funds are entirely gifted. If your credit is strong and you can put down 5%, run both scenarios side by side, the total monthly cost, not just the rate, is what matters. You can compare payment scenarios on the mortgage calculator, or see the full list of loan programs.
FHA guidelines and county limits are updated periodically. For a current read on your file in New Hampshire, Massachusetts & Maine, call 603-212-7944.