FHA Loan Down Payment Requirement: Key Information
FHA loans provide an accessible path to homeownership for many potential buyers, but there are important conditions. Get all the key information about the FHA loan down payment requirement here.
FHA Loan Down Payment Requirement: Key Information
Are you looking to purchase a home and curious about what down payment is required for an FHA loan? A Federal Housing Administration (FHA) loan is a popular choice for first-time homebuyers due to its low credit score requirements and low down payment options. The minimum down payment requirement for an FHA loan is 3.5%. Here is more information about FHA loan down payment requirements.
How to Determine Your Down Payment
Your down payment is the amount of money you will need to pay upfront before you can obtain your loan. The FHA loan requires a minimum of 3.5% of the purchase price of the home. In order to calculate your down payment, you will need to figure out the purchase price of the home, minus the minimum downpayment of 3.5%. For example, if the purchase price of the home is $200,000, your down payment will be $7,000.
Other Expenses to Consider
The down payment is not the only expense associated with an FHA loan. Buyers will also need to take into consideration the closing costs and any additional costs associated with the loan. These costs can add up to several thousand dollars in addition to the down payment. Additionally, be sure to note any differences in insurance costs due to the type of loan you select.
Who Is Eligible for an FHA Loan?
To be eligible for an FHA loan, you must have a minimum credit score of 580. Additionally, borrowers must have a steady income and a debt-to-income ratio of 43% or less. In addition to income and credit score requirements, borrowers must also meet other requirements including having a valid Social Security number and a valid form of identification.
Bottom Line
An FHA loan can be a great way for first-time home buyers to purchase a home with a low down payment requirement. The requirement is 3.5%, but to truly determine the down payment associated with an FHA loan, buyers should take into account the additional costs associated with the loan. As with all loans, it is important to talk to a financial expert to decide if an FHA loan is the best option for your needs.