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Is it Possible for a Felon to Get an FHA Loan? Yes! Here’s How It Works

Key Takeaways

  • Borrowers are not required to undergo a criminal background check by lenders.
  • Lenders are more concerned with your current financial potential than with your previous criminal history. Before applying, you should focus on improving your financial situation.
  • The Fair Housing Act applies to people with a criminal record if the provider treats people with comparable criminal histories differently because of their race, national origin, or other protected characteristic.

A felony conviction on your criminal record can have far-reaching consequences in your life, upsetting the normalcy that those with these histories seek.

If you want to start over, we can assure you that finding a home is more than possible. Most lenders are only concerned with your ability to make on-time payments when you apply for a home loan, whether it is government-backed or conventional.

Is it required for lenders to run a criminal background check?

The answer is no, a background check is not required.

According to FHA, “The mortgagee is not required to execute a criminal background check on the borrowers.”

It is also worth noting that, while there are no laws protecting people with a criminal record from being discriminated against by lenders, guidance released by HUD, this type of discrimination can still be considered illegal under the Fair Housing Act if “a housing provider treats individuals with comparable criminal histories differently because of their race, national origin, or other protected characteristic (i.e., disparate treatment liability).”

HUD recognizes in the same guidance that easily accessible housing for those recently released from incarceration is critical for their successful reentry into society.

You cannot guarantee that your criminal record will be checked or that it will have no impact on your eligibility for a home loan. The lender is still in charge of granting you a loan. A criminal record may turn them off because it indicates an individual’s potential instability.

Although most lenders don’t do background checks, it is still preferable to find FHA lenders that specifically don’t, just to be safe.

Is it possible to get a mortgage if you have a criminal record?

Lenders like to lend to people who are stable and responsible, and your criminal background may raise concerns in their eyes. However, because the lender makes this judgment, you have no legal safeguards that require a lender to approve you for a loan.

But all hope is not lost. More often than not, the lender won’t look any further into your background if you show that you have a good credit score and a stable employment history.

Why not rent instead?

Renting is another popular way to get a place to live. But it’s easier for felons to get a home loan than it is to get a rental. Many landlords check tenants’ backgrounds, but lenders don’t. Because of this, the best way for a convicted felon to get a home of their own is to save up for it.

Getting your finances in better shape

Not having a criminal record is the hardest part of getting a home loan. The hardest part is building up your finances.


What comes first? You need a place to sleep, so you’ll need to find temporary housing before you can move on.

Solution: Now is the time to ask for help from your friends and family. Get a friend or family member to co-sign the lease with you so you can move in as soon as possible. Also, instead of an apartment, try renting a house that is managed by the owner. This way, you can deal with a real person instead of a huge management company.


You’re most likely going to have missed some payments while you were serving, leading to a lowered credit score.

Solution: First, get your credit checked for free online. Then get with a credit repair agency to help clean things up. The time to fix all this can vary, so start immediately.


There will be gaps in your work history after you’ve done your time. After a conviction, it’s also hard to find stable work because many employers do background checks that go back at least 7 years, and sometimes more.

Solution: Take any job you can get and stick with it. The only thing you want to come out of this is a start on your employment history, no matter how bad the job is.


If you don’t have a lot of money saved up, you’ll probably need to start saving for a small downpayment.

Solution: Focus on saving up money for your down payment and closing costs. is great at doing this for you without even having to think. It automatically puts money into savings for you based on your spending habits (and yes, you can withdraw at anytime).


During this time, it’s also important not to do anything wrong, especially if it’s a felony. Sounds like a no-brainer, but things aren’t always as simple as they seem.

Solution: Just don’t get into any trouble. Pay attention to the way forward. Your crime doesn’t make you who you are, and since life goes on, so should you.

What a felon needs to do to get an FHA loan

The requirements for FHA loans are more lenient compared to conventional loans. So, they are a great option for first-time home buyers and even people with a criminal record.

  1. Credit score. FHA loans are known for their low-down-payment option of only 3.5%. But note that you need a credit score of at least 580 to qualify. If your credit score is low, you have to pay at least a 10% down payment.
  2. DTI. For FHA loans, the general rule is that your debt-to-income ratio can’t be more than 43%. If it does, you’ll need things like a big down payment to make up for it.
  3. Stable employment and income. The lender will also want to see W-2 forms, pay stubs, investment statements, and annual tax returns that show your employment and income history for the past 2 years.
  4. Must use the property as a primary residence. FHA loans are only for your main home. If you plan to use it for something else, like a vacation home or rental property, you won’t be able to get it.
  5. MIP. This stands for Payments for Mortgage Insurance. With FHA loans, you have to pay them back over the whole life of the loan. You can opt for conventional or streamline refinancing later down the line to lower it.

Tips for ex-offenders who want to get an FHA loan

It is hard to move on in life when you have a criminal record. But if you really want your own place, you should know that it is possible.

If you work on building your financial reputation, the lender won’t even bother to look into your past. Even if they do, they will care much more about how well you are doing financially.

Remember to also note the different loan limits and rates of an FHA loan. If repair costs are more than $5,000, you can go for an FHA 203(k) loan, which is a loan mostly used to fix up homes that need a lot of work.

For this process to work, you need to be patient and determined. But who wouldn’t want someone to help them out? When you’re ready to move and get the keys to your new home, don’t be afraid to check your eligibility.