FHA Down Payments for Homebuyers
Why Rent When You Can Own With an FHA Loan?
The down payment is the out-of-pocket investment you make when you buy your property. The required amount is generally calculated as a percentage of the purchase price, determined by the requirements of the loan. This upfront payment is essentially seen as your investment in the mortgage, since you stand to lose it if you're unable to meet your monthly payment obligations.
Credit score, friends and family contributions, and down payment assistance programs can each affect how much you'll need to come up with on your own.
FICO Scores and Down Payment Requirements
![Credit Report for FHA Loans](/assets/images/fha/fha-credit-report.png)
First-time buyers want to know how much they're expected to save for their FHA loan down payments. For those who qualify financially as new borrowers or return borrowers, the minimum FHA mortgage down payment is 3.5%. However, that low down payment option is not available for everyone.
Those who have marginal FICO scores are required to make a 10% down payment. According to FHA home loan minimum standards, those with FICO scores between 500 and 579 are required to come up with this higher down payment. Those with FICO scores at 580 or higher technically qualify for the lowest down payment offered.
It's best to start saving early for your down payment and to anticipate how much that payment might be. You'll need to estimate the price range for the home you want to buy and calculate either the 3.5% (low) or 10% (high) down payment using that potential sales price as your guide.
SEE YOUR CREDIT SCORES From All 3 Bureaus
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Learn what your score means.
- Do You Need to Pay 20% Down on a Home Loan?
- Do You Qualify for an FHA Home Loan or Refinance Loan?
- Fixing Credit Report Problems Ahead of Your FHA Home Loan
Down Payments Assistance Programs and Grants
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Saving up for the down payment can be a major obstacle people face when trying to buy a house. It's why so many people are never able to transition from renters into owners. Borrowers with high credit scores and low debt-to-income ratios might seem like ideal candidates for an FHA loan, but might still not have enough money saved to put down on a new home.
Down Payment Assistance (DPA) programs, sometimes referred to as grants, can provide homebuyers with funds to cover up front and closing costs when buying a house. Borrowers will need to meet the eligibility requirements of the specific program they'd like to use. Credit scores, household income, family size, and homebuyer education requirements will likely be factors.
Find a Down Payment Assistance Program in your area.
- Who Offers Down Payment Assistance for FHA Loans?
- Housing Counseling for First-Time Home Buyers
- Facts About Down Payment Assistance and Grant Programs
"Yes" or "No" for Down Payment Sources?
![Families can help with your FHA down payment](/assets/images/fha/down-payment-family.png)
What if you can't come up with the entire down payment on your own? Lenders will require the full amount of money as the required down payment, but friends, family, and employers can make a down payment gift to you that reduces your financial burden. That money is required to be verified by the lender as having come from an approved source.
The FHA doesn't just list who may give such a gift--it also has rules discussing who MAY NOT provide gift funds for an FHA loan down payment. The gift donor may not be a person or entity with an interest in the sale of the property, such as the seller, real estate agent, or the builder.
FHA loan rules are specific and clear in these areas to insure fairness and to preserve the integrity of the home buying process with FHA loan funds.
- FHA Down Payment and Gift Rules Still Apply
- FHA Loans and Third-Party Contributions
- FHA Loan Rules for Down Payment Gift Funds
More About FHA Loan Down Payments
![Every FHA Loan Needs a Down Payment](/assets/images/fha/down-payment-fha.png)
1) Remember, the FHA does not offer down payment assistance. That doesn't mean the agency doesn't provide resources that can help you locate a DPA program in your area. These programs must meet adhere to federal regulations when providing down payment help to borrowers.
2) If you are concerned about your ability to credit qualify for an FHA mortgage, talk to a participating lender and ask some advice about your chances and what can help get you closer to loan approval. There's no substitute for good credit and you'll want to review your credit report long before you start filling out loan paperwork.
3) Your rental history can help boost your credit if you pay on time and have a pattern of doing so. But the catch is that your landlord must report this activity to the credit agencies. You'll need a minimum of 12 months of on-time rent and utility payments; anything less can seriously hurt your chances for loan approval.
- Do You Need Down Payment Assistance for Your Home Loan?
- FHA Loan Advice for Those With Thin Credit
- Facts About Down Payment Assistance and FHA Loans
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FHA Loan Programs
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SEE YOUR CREDIT SCORES From All 3 Bureaus
Do you know what's on your credit report?
Learn what your score means.
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FHA Loan Articles and Mortgage News
August 7, 2024 - There are many ways to default and go into foreclosure on an FHA mortgage, but many of those issues can be avoided if you work with your loan officer in time. No borrower wants to lose their home but to avoid this process, you must coordinate with your lender.
August 5, 2024 - Sometimes, an FHA appraisal comes in lower than the borrower expects. In such cases, the house hunter may be tempted to ask the lender to have the appraisal done again, just in case of issues with the original work.
August 4, 2024 - When you need to finance the construction of a brand new home, you should consider the basic loan options available: single-close construction loans and two-close construction loans. Each loan type carries distinct benefits and drawbacks.
August 3, 2024 - Are you a homeowner 62 or older thinking about tapping into your home equity? Do you need additional funds for bills, vacations, or other expenses? Reverse mortgages can be an option for the right borrower, but choosing between this and a conventional reverse mortgage can be confusing.
August 2, 2024 - The mortgage industry and The United States Department of Housing and Urban Development have options to support qualifying borrowers whose homes have been damaged or destroyed by a disaster in federal disaster areas.