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The FHA down payment can be as low as 3.5% of the adjusted value of the home. Compare that to the conventional loan 20% down requirement and it’s easy to see why FHA loans might be more appealing. Smaller down payments make sense if you don’t plan to keep the home long-term. 

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

FHA Home Loan Down Payments: How Much?

January 25, 2020

FHA Home Loan Down Payments: How Much?
Some Americans think that real estate down payments for the purchase of a single-family home are higher than many house hunters are actually paying.

According to several published reports and studies, a 20% down payment is assumed in many cases. But the reason 20% down sticks as a number (at least in the minds of some) may have more to do with the fact that 20% is the down payment needed on a conventional mortgage if you want to avoid having to pay for private mortgage insurance.

Bigger down payments are popular among those who plan to own the home for most of the loan term and want to save money over the lifetime of the loan by reducing the amount of the principal balance and saving on interest rate payments.

Smaller down payments make sense if you don’t plan to keep the home long-term. Why invest more up front to save on interest payments you won’t actually be making because you plan to sell the property?

The benefits of a bigger down payment do include more equity in the home; if you want to apply for cash-out refinancing at some point, the lower your principal balance, the better off you are when it is time to apply for a cash-out refi loan.

The FHA down payment can be as low as 3.5% of the adjusted value of the home. Compare that to the 20% some people believe you have to pay up front and it’s easy to see why FHA mortgages might be more appealing.

Add to that the ability to have friends, family, or local agencies contribute to the down payment and you have a situation where the actual out-of-pocket expense of the down payment is reduced.

There are rules about these funds, how they are sourced and where the money is delivered to the lender. Ask your loan officer about down payment assistance rules before you accept money from someone else to help you make that payment at closing time.

There is no fixed dollar amount for down payments. It will be a percentage of the adjusted value of the home where FHA mortgages go. Your credit score can affect the amount of your down payment, be sure to work on your credit as early as possible before applying for the loan.

There is no zero-down option for FHA home loans, but the down payment required is so low because it is intended to help first-time home buyers. That does not mean you don’t get access to the same low down payment as a repeat borrower--down payment requirements are determined by credit score, not by whether you have owned a home before.

When talking to a loan officer, ask what the FICO score requirements are for the lowest down payment. FHA loan standards must be met, but lender requirements may be higher depending on a variety of circumstances.

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