FHA Loan Down Payment Amounts
The Federal Housing Administration (FHA) offers mortgage loans that are designed to help first-time homebuyers and those with lower credit scores achieve their dream of homeownership. Here's a breakdown of FHA loan down payment requirements, gift funds, and other essential details.
FHA borrowers can use gift funds towards a down payment and closing costs. Interested parties can contribute up to 6 percent of the sale price towards a borrower's closing costs. It's important to note that the maximum borrowing limit for an FHA loan for a single-family home in most housing markets for 2025 is $524,225.
The minimum FHA loan down payment varies depending on your credit score. If your credit score is 580 or higher, you must make a minimum down payment of 3.5% of the home's purchase price. On the other hand, if your credit score is between 500 and 579, you must put down at least 10%. Unfortunately, a credit score below 500 disqualifies you from obtaining an FHA loan.
When it comes to gift funds, they can be a valuable source of assistance. Gift money and down payment assistance funds can be used towards the down payment. However, lenders may require a gift letter as part of the application process.
FHA loans generally require a credit score of at least 580 for the 3.5% down payment option, but with a 10% or higher down payment, borrowers with credit scores as low as 500 may qualify.
It's essential to remember that the required mortgage insurance premiums (MIPs) apply regardless of down payment. FHA mortgage insurance premiums include an upfront fee of 1.75 percent of the loan amount and an annual premium that ranges from 0.15 percent to 0.75 percent of the loan amount.
FHA borrowers are not allowed to use funds from the home builder, the home's seller, the real estate agent or broker, or anyone else with a vested interest in selling the home for a down payment. Down payment assistance can be applied to FHA loans, which can come from nonprofits, lenders, government, or state housing finance agencies.
No-money-down USDA loans are available for borrowers in eligible rural areas, while no-money-down VA loans are available for eligible members of the military and veterans.
To save up for an FHA loan down payment, set a homebuying budget, consider the purchase timeline, and assess current savings. By doing so, you'll be well on your way to securing your FHA loan and becoming a homeowner.
Lastly, it's crucial to note that FHA loans have more flexible eligibility guidelines than conventional loans. Some state housing finance agencies also package assistance with first-time homebuyer loans.
In conclusion, FHA loans offer a viable option for those seeking to purchase a home with a lower down payment and more flexible eligibility guidelines. With careful planning, gift funds, and the right guidance, you can navigate the FHA loan process and secure your dream home.
Personal-finance planning is vital for saving up for an FHA loan down payment, considering the purchase timeline and assessing current savings.
FHA borrowers can use gift funds towards a down payment and closing costs, making personal-finance assistance an important aspect of securing an FHA loan.
