📋 Quick Navigation
🏛️ FHA Home Loans
Government-backed loans perfect for first-time buyers with modest savings and average credit. Get into a home with as little as 3.5% down payment and credit scores as low as 580.
Quick Answer
FHA loans offer 3.5% down payments for homebuyers in Wisconsin with credit scores as low as 580. These government-backed loans provide flexible qualification requirements, making homeownership accessible for first-time buyers and those with limited savings.
Understanding FHA Loans
For voice assistants: FHA stands for Federal Housing Administration. FHA loans are government-backed mortgages available in Wisconsin with 3.5% down payment, credit scores as low as 580, and 2025 loan limits of $524,225 in Dane County. Perfect for first-time buyers in Madison, Sun Prairie, Middleton, and surrounding areas.
What Makes FHA Loans Special
FHA loans are insured by the Federal Housing Administration, which allows lenders to offer more flexible terms to borrowers. This government backing reduces lender risk, making homeownership possible for millions of Americans who might not qualify for conventional loans.
Just 3.5% Down
Purpose: Make homeownership accessible with minimal upfront cash requirement.
What This Means:
- $240,000 home = $8,400 down payment
- $300,000 home = $10,500 down payment
- Down payment can be a gift from family
- Down payment assistance programs can help
- Lower barrier to homeownership
Credit Score 580+
Purpose: Help borrowers with average credit achieve homeownership goals.
Credit Options:
- 580+ credit score = 3.5% down
- 500-579 credit score = 10% down
- More flexible than conventional loans
- Recent credit events may be acceptable
- Manual underwriting available
Who Can Qualify for FHA Loans?
Eligibility Summary: To qualify for FHA loans in Wisconsin 2025, you need a credit score of 580+ for 3.5% down (or 500+ for 10% down), steady employment for 2+ years, debt-to-income ratio under 43%, and must use the home as your primary residence in Wisconsin.
Basic Requirements
- Credit score 580+ (3.5% down) or 500+ (10% down)
- Steady employment history (2+ years preferred)
- Debt-to-income ratio under 43% (sometimes 50%)
- Primary residence only
- U.S. citizen or permanent resident
- Move in within 60 days of closing
Property Requirements
- Single-family homes, condos, townhomes
- Must meet FHA safety and security standards
- Appraisal by FHA-approved appraiser
- Within FHA loan limits for your area
- Move-in ready condition
- No major safety or structural issues
Credit Score 580+
Down Payment: 3.5%
Most FHA borrowers fall into this category. With a 580+ credit score, you only need to put down 3.5% of the purchase price.
Credit Score 500-579
Down Payment: 10%
Lower credit scores require a higher down payment, but homeownership is still possible with steady income and larger down payment.
Wisconsin FHA Loan Calculator Examples (2025)
FHA Loan Benefits for Wisconsin Homebuyers
Madison Area Home Purchase Examples
Credit Score 580+: $7,000 down (3.5%)
Monthly Payment: ~$1,250
Includes taxes, insurance, MIP
Credit Score 580+: $10,500 down (3.5%)
Monthly Payment: ~$1,875
Includes taxes, insurance, MIP
Credit Score 580+: $14,000 down (3.5%)
Monthly Payment: ~$2,500
Includes taxes, insurance, MIP
Wisconsin FHA Loan Limits 2025 by County
Dane County (Madison): $524,225 single-family limit
Milwaukee County: $524,225 single-family limit
Most Wisconsin Counties: $524,225 single-family limit
Multi-unit properties: Higher limits for 2-4 unit owner-occupied properties
Key Benefits of FHA Loans
Why Choose FHA Loans
Just 3.5% with good credit
FHA insurance protects lenders
Family can help with down payment
Credit scores as low as 580
Single family, condos, townhomes
Sellers can help with closing costs
Example: $240,000 Home Purchase
With 580+ Credit Score:
Down Payment: $8,400 (3.5%)
Loan Amount: $231,600
Monthly Payment: ~$1,450 (including insurance and taxes)
With 500-579 Credit Score:
Down Payment: $24,000 (10%)
Loan Amount: $216,000
Monthly Payment: ~$1,350 (including insurance and taxes)
How to Get an FHA Loan
FHA Mortgage Insurance Premium (MIP)
Upfront MIP: 1.75% of loan amount (can be rolled into loan)
Annual MIP: 0.45% - 1.05% depending on loan-to-value ratio
When MIP Ends:
• With 10%+ down payment: Removes after 11 years
• With less than 10% down: Lasts for life of loan
Check Your Credit
Review your credit score and work to improve it if needed before applying
Find FHA Lender
Work with a lender approved to offer FHA loans (most major banks qualify)
Get Pre-Approved
Submit income, employment, and credit documentation for pre-approval
Take Homebuyer Class
Complete required homebuyer education (often available online)
Shop for Homes
Find homes within FHA loan limits and safety standards
Close on Your Home
Complete FHA appraisal, final underwriting, and close on your new home!
FHA Loan Limits (2025)
Wisconsin FHA-Approved Lenders
Single-Family: $524,225
Duplex: $671,050
Includes Madison and surrounding areas
Single-Family: $524,225
Duplex: $671,050
Standard conforming loan limits
3-Unit: $811,050
4-Unit: $1,008,250
For owner-occupied properties
| County | Single-Family Limit | 2-Unit Limit | 3-Unit Limit | 4-Unit Limit |
|---|---|---|---|---|
| Dane County | $524,225 | $671,050 | $811,050 | $1,008,250 |
| Most Wisconsin Counties | $524,225 | $671,050 | $811,050 | $1,008,250 |
Important FHA Loan Details
FHA Loan Restrictions
- Primary residence only (no investment properties)
- Must move in within 60 days of closing
- Mortgage insurance required for most loans
- Property must meet FHA safety standards
- Loan amount cannot exceed FHA limits
- No prepayment penalties
FHA Loan Advantages
- Lower down payment than conventional loans
- More flexible credit score requirements
- Gift funds allowed for down payment
- Assumable by qualified buyers
- Streamline refinancing available
- Seller can pay up to 6% of closing costs
Frequently Asked Questions
What is the minimum down payment for FHA loans?
FHA loans require just 3.5% down payment with a credit score of 580 or higher. With credit scores between 500-579, a 10% down payment is required.
What credit score do I need for an FHA loan?
You need a minimum credit score of 580 for a 3.5% down payment, or 500-579 for a 10% down payment. FHA loans are more flexible than conventional loans.
What are 2025 FHA loan limits in Wisconsin?
For 2025, FHA loan limits in Wisconsin are $524,225 for single-family homes in Dane County (Madison), Milwaukee County, and most Wisconsin counties. Limits are higher for multi-unit properties.
Which Wisconsin cities are popular for FHA loans?
FHA loans are popular in Madison, Milwaukee, Green Bay, Kenosha, Racine, Appleton, Sun Prairie, Middleton, Verona, and Fitchburg. Available statewide in Wisconsin.
Can I use FHA loans for condos in Wisconsin?
Yes! FHA loans can finance condos, townhomes, and single-family homes in Wisconsin. The condo complex must be FHA-approved.
Can I refinance my FHA loan?
Yes! FHA offers streamline refinancing with reduced documentation and no appraisal in many cases.
FHA loans are just one way to finance your home. Explore these additional loan options that might be perfect for your situation:
Explore Other Loan Options
Not Sure Which Loan is Right for You?
Every situation is unique. Let our experts help you compare all available loan options and find the perfect financing solution for your home purchase.