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If you've already started saving for your down payment, your appraisal, compliance inspections, and other costs, you’re well ahead of the game. Those who haven’t started truly planning and saving may feel a bit lost when trying to get ready for the loan. 

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

FHA Home Loan Costs to Save for in 2020

January 12, 2020

FHA Home Loan Costs to Save for in 2020
Buying a home in the new year? If you have already started saving for your down payment, your appraisal, compliance inspections, and other costs, you’re well ahead of the game; those who haven’t started truly planning and saving may feel a bit lost when trying to get ready for the loan. But there are some specific expenses you can anticipate to help make the process more budget-friendly.

When starting out, give your planning and budgeting process 12 months at a minimum.Your planning phase should have enough time built in to order and review your credit reports from the three major credit agencies, and you also need time to decide how much down payment to make, what to roll into the loan, etc. 

Costs of Your Mortgage Loan

There are several costs required besides your down payment. But what about that down payment requirement? Most borrowers are required to make a down payment, aside from those purchasing with VA loan benefits which is one of the few home loans to offer a no-money-down mortgage.

Your FHA loan down payment will be at a minimum, 3.5% of the adjusted price of the property as a down payment. For a $100,000 home that down payment would be $3500. Conventional loans can require as much as 20% which comes out to a $20,000 down payment for the same loan amount.

Your seller is not permitted to help you with the down payment, and the lender is also forbidden from providing you with down payment gift funds, though a local agency may be permitted to do so if the funds and the nature of the gift (no repayment expected) meet FHA standards.

Mortgage Insurance Requirements

Depending on your loan-to-value ratio and/or the type of mortgage loan you apply for, and/or state law, you may be required to pay for mortgage insurance.

FHA home loans require a mortgage insurance premium and an Up Front Mortgage Insurance Premium (UFPMIP) payment due either at closing time either as an in-cash payment or as an add-on to the mortgage.

Appraisals and Inspections

Home loans require appraisals to determine the fair market value of the property and set the loan amount. The cost of a typical appraisal varies from housing market to housing market, but some areas have appraisal costs at or around $400, which is just a rough guide of what to expect rather than a specific price.

Do not purchase a home without having it inspected as well as appraised. Buying a home based on the appraisal alone is not wise or recommended.

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