What credit score and down payment are required?

FHA allows 3.5% down with a 580 score, or 10% down with a score of 500-579. Individual lenders may require higher scores.

Can the down payment be a gift?

Yes — your full 3.5% down payment can come from a family member as a documented gift, which helps in many of these situations.

FHA Loan With Collections on Credit

FHA Loan With Collections on Credit is more achievable than most people expect. Below is what the FHA actually requires here, the documentation lenders ask for, and your next move.

The short answer

FHA does not require you to pay off all collections. If non-medical collections total more than $2,000, the lender either uses 5% of the balance as a monthly payment in your DTI, verifies the actual payment, or requires payoff. Medical collections are excluded.

What lenders focus on here

Approval comes down to the full picture, yet in a case like this the deciding factors are usually your credit, how cleanly your income documents, and your debt-to-income ratio.

Credit: the 580 line decides 3.5% vs 10% down; recent on-time history outweighs old marks.
Down payment: 3.5% minimum (580+), and gift funds are allowed.
Lender overlays: minimums vary by lender, so comparing several is worth it.

FHA guidelines and lender overlays change. Join the free FHA Notification Program to be alerted when the rules that affect this situation shift.

Your next steps

Start by checking your credit and assembling income documents, then seek a true pre-approval. In a situation like this the difference between lenders is real, so get quotes from several before committing.

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Frequently Asked Questions

FHA Loan With Collections on Credit — is it possible in 2026?: FHA does not require you to pay off all collections. If non-medical collections total more than $2,000, the lender either uses 5% of the balance as a monthly payment in your DTI, verifies the actual payment, or requires payoff. Medical collections are excluded.
What credit score and down payment are required?: FHA allows 3.5% down with a 580 score, or 10% down with a score of 500-579. Individual lenders may require higher scores.
Can the down payment be a gift?: Yes — your full 3.5% down payment can come from a family member as a documented gift, which helps in many of these situations.