Do FHA loans have down payments?

Low minimum down payments make FHA loans more affordable.

FHA loans are backed by the Federal Housing Administration and help homebuyers afford a mortgage with easier credit requirements and low minimum down payments as compared to Conventional loans. These loans are popular with first-time homebuyers as well as homebuyers who may have lower incomes and credit scores.

Are FHA loan down payments required?

Down payments are required when you buy homes with FHA loans. FHA loans have lower minimum down payment requirements compared to conventional loans.

Your minimum FHA loan down payment is determined by your credit score. If your credit score is 580 or higher, you only need to put down 3.5% of the purchase price of the home with an FHA loan. This means if you wanted to buy a $270,000 home with an FHA loan, you will need to make at least a $9,450 down payment.

You can choose to make a larger down payment than the FHA requires. Making a larger down payment can help you save on interest because you are borrowing less money to buy your home. Finally keep in mind that the amount of your FHA down payment can affect how much you pay for mortgage insurance premiums (MIP) and for how long you need to pay these premiums.

To learn more about how much your monthly payment might be, check out our FHA loan calculator.

Can you get a "no down payment" FHA loan?

You might see information about "no down payment" FHA loans on websites. What these websites generally mean is that it is possible to get help finding the money for your down payment. For example, the Federal Housing Administration allows you to use a gift from a family member to make your FHA down payment.

Many states also have FHA loan down payment assistance programs. Visit the U.S. Department of Housing and Urban Development (HUD) website to see what assistance may be available in your state. You’ll find links to various programs such as housing counselor agencies who can provide advice on topics such as buying, foreclosures, credit issues and more.

In addition, there are state-specific homeownership assistance programs such as Habitat for Humanity, educational programs to learn about buying and maintaining your home, community resources, and homeownership voucher programs that provides down payment assistance if you qualify.

Are down payments needed to refinance an FHA loan?

Sometimes customers ask us if down payments are required when you refinance an FHA loan. The answer is no. However, lenders might have home equity requirements they measure using a loan-to-value ratio (LTV). These requirements might state you need to keep your LTV below a certain maximum percentage to get your refinance approved.

Keep in mind that refinancing an FHA loan often comes with closing costs you will need to pay or add to your loan amount. By refinancing, the total finance charges may be higher over the life of the loan. If you qualify for FHA streamline refinancing with Freedom Mortgage, we can offer you refinancing with less paperwork, easy credit qualification, and faster closing.

*Freedom Mortgage is a top FHA lender in the United States, according to Inside Mortgage Finance, 2023.

Last reviewed and updated February 2024 by Freedom Mortgage.