FHA loans require a down payment, but the minimum is 3.5% of the purchase price
Federal Housing Administration loans do not let you buy a home with zero money down. You must put down at least 3.5% of the purchase price. On a $200,000 home, that is $7,000. On a $300,000 home, that is $10,500. This 3.5% minimum applies to most borrowers and is set by FHA rules, not by individual lenders.
The 3.5% requirement has stayed the same for years. It is lower than the 5% to 20% down payments that conventional loans typically require, which is why FHA loans appeal to first-time buyers and people with limited savings. However, you cannot avoid the down payment entirely—some money must come from your own pocket or from an acceptable gift source.
The down payment is separate from closing costs, which are additional fees you pay at closing. Closing costs on an FHA loan typically run 2% to 5% of the loan amount. You may be able to roll some closing costs into the loan itself, but the down payment must be paid upfront.
Key Takeaways
- FHA loans require a minimum 3.5% down payment on the purchase price, with no exceptions for borrowers who meet credit and income requirements.
- The down payment must come from your own funds, a gift from a family member, or a grant program—not from a loan or borrowed money.
- If your credit score is between 500 and 579, FHA requires 10% down instead of 3.5%, and you may face stricter lending terms.
- Closing costs are separate from the down payment and typically add 2% to 5% more to your total cash needed at closing.
- Some lenders allow you to roll closing costs into the loan amount, but the down payment itself cannot be financed.
Where the down payment money can come from
Your down payment must be "seasoned," meaning it has been in your bank account for at least two months before you explore. The lender will ask for bank statements to verify this. Money that arrived yesterday does not count, even if it is yours.
FHA accepts down payment funds from several sources: your own savings, a gift from a family member (spouse, parent, sibling, or relative by blood or marriage), a grant from a nonprofit or government program, or a combination of these. A family member can gift the full 3.5% if you have no savings of your own.
Money you borrow from anyone—a friend, a family member, a personal loan, a credit card cash advance—cannot be used for the down payment. The lender will see the new debt on your credit report and may deny the loan. If a family member gives you money as a gift, they must sign a gift letter stating it does not need to be repaid. The lender will ask for this letter.
How credit score affects your down payment requirement
Most borrowers with a credit score of 580 or higher can put down 3.5%. If your score is between 500 and 579, FHA requires 10% down instead. This is a hard rule—no lender can offer you 3.5% if you fall into this range.
A score below 500 disqualifies you from an FHA loan entirely. If you are close to 500 or 580, spending a few months paying down debt or disputing errors on your credit report may move you into a better tier and lower your down payment requirement.
What happens if you cannot save 3.5%
If you do not have 3.5% saved and cannot receive a gift, several paths exist. Some nonprofits and community development organizations offer down payment information grants that do not need to be repaid. These programs vary by state and county—your local housing authority or a 211 referral can tell you which ones operate in your area.
Some employers offer down payment information as an employee benefit, particularly in fields like healthcare, education, and public service. Ask your HR department whether your employer has such a program.
A few state and local government programs also provide down payment help, though funding and may be able to access rules change. The National Council of State Housing Agencies maintains a searchable database of state programs, though you will need to contact your state housing finance agency directly to learn current details.
If none of these options work, you may need to wait and save more, or explore whether a conventional loan with a mortgage insurance option might work for your situation. A mortgage broker can compare both routes for you.
The difference between down payment and mortgage insurance
FHA loans require mortgage insurance in addition to your down payment. This is not the same thing. Mortgage insurance protects the lender if you stop paying; it does not protect you. You pay for it, but the lender collects the benefit.
FHA mortgage insurance has two parts: an upfront premium (usually 1.75% of the loan amount, often rolled into your loan) and an annual premium (0.55% to 0.80% of the loan amount per year, added to your monthly payment). The annual premium stays on your loan for the life of the loan if you put down less than 10%. If you put down 10% or more, the annual premium drops off after 11 years.
This means your total monthly payment includes principal, interest, property taxes, homeowners insurance, and mortgage insurance. The mortgage insurance portion can add $100 to $300 per month depending on your loan size.
Down payment timing and the closing process
You typically bring your down payment to the closing table on the day you sign the final paperwork. The title company or closing agent collects it along with any remaining closing costs you have not already paid. The down payment is then held in escrow until the sale officially closes, usually one to three days later.
Some lenders ask you to wire the down payment a day or two before closing to verify the funds are real and available. Ask your lender when they need the money and which account to send it to. Wire fraud is common in real estate, so confirm wire instructions by calling your lender directly—do not use contact information from an email.
If you are using a gift, the gift letter must be signed and delivered to the lender before closing. The lender will ask for proof that the gift actually arrived in your account (usually a bank statement showing the deposit). Without this documentation, the lender can delay or deny the loan at the last minute.
Frequently Asked Questions
Can I get an FHA loan with no money down?
No. FHA requires a minimum 3.5% down payment if your credit score is 580 or higher, or 10% if your score is between 500 and 579. There is no zero-down option. If you cannot save this amount, explore down payment information programs through your local housing authority or nonprofits in your area.
Can I borrow the down payment from someone?
No. Borrowed money cannot be used for the down payment. The lender will see new debt on your credit report and may deny the loan. A family member can gift the money, but it must be a true gift with no repayment expected, documented with a signed gift letter.
Is the down payment the same as mortgage insurance?
No. The down payment is money you put toward the purchase price. Mortgage insurance is a separate cost you pay monthly to protect the lender. FHA loans require both: a down payment plus mortgage insurance premiums added to your monthly payment.
What if my down payment funds are less than two months old?
The lender will likely ask you to wait until the funds have been in your account for two months before submitting your process. This is called the seasoning requirement. If you cannot wait, some lenders may make exceptions if you can document where the money came from (such as a paycheck or tax refund), but this varies by lender.
Can closing costs be added to my down payment?
No. The down payment and closing costs are separate. However, some lenders allow you to roll closing costs into the loan amount so you do not pay them upfront. The down payment itself must always be paid at closing and cannot be financed.