August 9, 2011
FHA home loans require a “minimum investment” or down payment from the borrower in order to be approved. The amount of the down payment for FHA insured loans at the time of this writing is a minimum 3.5% of the price of the home.
Some loans may require more due to certain factors, but 3.5% is the FHA minimum. The buyer must pay the down payment, and it should be noted that other up-front costs such as closing expenses, appraisal fees and other charges do not count towards this minimum.
The down payment amount all by itself is a serious amount of money for any borrower, and it’s one reason why financial experts always recommend borrowers take at least a year to prepare for the costs of a home loan–making the down payment is an expense worth planning well in advance for.
Some borrowers may feel the burden of a 3.5% down payment more than others, which is why the FHA rules include provisions to allow down payment assistance that may be offered by state and local governments. The FHA offers help in locating such local home buying programs, for they have a list of all states including U.S. territories. Each state has a set of links to state and local agencies, programs, even information on HUD homes for sale in these areas.
But one thing the FHA does not do is offer down payment assistance itself. FHA/HUD programs are designed to help individuals and families get affordable housing, but the down payment aspect is left to the borrower and any local programs they may be able to apply for. HUD does provide funding to agencies for down payment assistance programs, but not to individual borrowers.
Any down payment assistance program offered by state or local agencies is sure to have a long list of applicants–it’s best to investigate these options as early as possible to learn what may be required and about how long the application process may take. Any delays in availability of down payment funds could affect your ability to purchase a given property, so it’s best to start exploring such options sooner rather than later.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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