FHA Loans in California (2026) — Limits, Rates, and Who They Fit
FHA isn't 'the bad-credit loan' — it's a 3.5% down option with strong rates for most California buyers. Here's when it actually beats conventional.
FHA gets a bad reputation in California ("only for people with bad credit"), which costs a lot of buyers money. The truth: FHA is a 3.5% down loan with competitive rates that often beats conventional for buyers with FICO under 740 or limited assets.
2026 FHA loan limits — California
FHA limits are set by county, ranging from the national floor ($524,225) to the high-cost ceiling ($1,209,750):
- LA, OC, Ventura, San Diego, San Mateo, Santa Clara, SF: $1,209,750
- Inland Empire (Riverside, San Bernardino): $644,000
- Sacramento: $766,550
- Most other counties: somewhere in between
Above these limits in a given county, you're in jumbo territory (no FHA).
When FHA beats conventional
- FICO 620-700 — FHA's rate is typically 0.25-0.50% better than conventional at these scores
- Less than 5% down — FHA's 3.5% min is the lowest of any conforming program
- Manual underwriting needed — FHA is friendlier to non-traditional credit profiles
- Higher DTI — FHA allows up to 56.99% DTI with compensating factors; conventional usually caps at 50%
The catch: MIP
FHA charges Mortgage Insurance Premium (MIP) two ways:
- Upfront: 1.75% of loan amount (rolled into the loan)
- Annual: 0.55% for loans with ≥10% down; 0.85% for under 10% down
Annual MIP lasts the life of the loan if you put less than 10% down. To get rid of it, you'd refinance into conventional once you hit 20% equity.
When NOT to use FHA
- FICO 760+ AND 20% down — Conventional wins, no question
- Investment property — FHA is owner-occupied only
- Loan size above county limit — Look at jumbo or high-balance conventional
Want a side-by-side FHA vs conventional quote? Run both in 60 seconds — no commitment.