How Much Is My Down Payment?

March 4, 2019

First-time buyers want to know how much to expect as a down payment-what is the FHA home loan requirement? For those who qualify financially as a new borrower or return borrower, the minimum FHA mortgage loan down payment is 3.5%.

Those who have marginal FICO scores are required to make a 10% down payment, so according to the FHA home loan minimum standards (not lender requirements, which may vary) those with FICO scores between 500 and 579 are required to pay 10% down. Those with FICO scores at 580 or higher technically qualify for the lowest down payment.

But not all borrowers will pay the full amount of that 10% or 3.5% down themselves.

You May Not Have to Pay The Full Amount of Your Home Loan Down Payment

That headline might seem a bit misleading since the lender will require the full amount of money down required. But friends, family, and employers can make a down payment gift to you that reduces your financial burden.

You can also apply for any FHA-compliant down payment assistance program in your area. You should know that the FHA itself does not provide this assistance, this would come from a third party and that down payment help must meet FHA loan guidelines.

FHA Loan Rules That Can Help Lower Your Out-Of-Pocket Home Loan Costs

You can negotiate with the seller to get a seller contribution toward your closing costs. The seller is allowed to contribute as much as six percent of the sale price of the home in this way, but any further contributions are considered an “inducement to purchase” and result in a dollar-for-dollar reduction in your home loan amount based on overage.

Prepare Early for Your Down Payment

It is best to start saving early for your down payment and to anticipate how much that payment might be. How to do it? You will need to know your approximate price range for the home you want to buy and calculate a 3.5% down payment using that price as your guide.

You can also save money up front on your FHA home loan by choosing to finance closing costs like the Up-Front Mortgage Insurance Premium, which can either be financed in full or paid in cash. You can’t finance part of the premium, you can only choose to finance all or none of it.

Talk to your loan officer about your FHA home loan options including interest rates, down payment amounts, and which closing costs may be financed.

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