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FHA loan down payment: what's the required minimum?

FHA loans require a down payment as part of the home purchase transaction. Depending on the credit score of the applicant, the FHA loan down payment requirement can either be 3.5% or 10% of the total purchase price.

 There are other FHA loan fees to be aware of, mainly mortgage insurance premiums.
At Credit Union of Southern California (CU SoCal), we make getting FHA and conventional mortgage loans easy!
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Read on to learn more about the FHA loan down payment requirement.

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What is an FHA loan?

FHA loans have been helping people become homeowners since 1934. The Federal Housing Administration (FHA) is part of the U.S. Department of Housing and Urban Development, and provides mortgage insurance on loans made by FHA-approved lenders. FHA mortgage loans were created to help more [people become homeowners, particularly first-time homebuyers and those who have low credit scores and/or low income.
The FHA insures mortgages on single-family homes, and multifamily properties, throughout the United States and its territories.

Do FHA loans require a down payment?

Yes, there is an FHA loan down payment requirement. However, the requirement amount can vary based on each borrower’s unique circumstances such as your credit score and whether you have taken out an FHA loan in the past.
How much of a down payment do I need?
  • For credit scores 580 or higher. A homebuyer can put as little as 3.5% down on an FHA loan if their credit score is 580 or higher.
  • For credit scores 580 or lower. Homebuyers with a credit score between 500 and 570 will need a down payment of 10%.

Do FHA loans require mortgage insurance?

Yes, all FHA loans and FHA loan refinances require that a mortgage insurance premium (MIP) be paid. MIP is an FHA-specific loan premium charged on all FHA new home purchases and refinances. It can be rolled into the mortgage amount. The current MIP rate is 1.75% of the mortgage amount.
Up-front mortgage insurance premium (UFMIP). This premium is required for all FHA loans and is paid at closing.

Monthly mortgage insurance premium. In addition to the UMIP, FHA borrowers will pay a monthly MIP, which is based on their calculated annual MIP payment.
All mortgage loans will require a mortgage insurance premium, unless the borrower makes a down payment of 20% or more, in which case the premium is waived. Mortgage insurance premiums protect the lender or loan issuer from financial loss if the borrower defaults on loan payment.

Additional fees for FHA loans

Aside from the UMIP, there are no other closing costs that are specific to meet FHA lending requirements. Other fees that homebuyers will need to pay are those imposed by lenders, such as fees for processing the loan application, underwriting, loan origination, credit report, etc. All mortgage loan transactions also include fees that will be paid to the state, county, or local taxing authority.

 How to save for an FHA loan down payment

To get an FHA loan you will need to make a down payment on the house you wish to purchase. There are some ways to save for that down payment:      
Get pre-qualified for a mortgage. Start by talking to a mortgage loan professional about your homeownership goals. To get pre-qualified means the lender will look at some basics of your finances and provide you with a rough estimate of how much of a loan you could qualify for and the interest rate you’d likely receive.

Create a budget. If you already have ample savings for making a down payment on a home, you’re a step ahead! Otherwise, saving money for the purchase of a home will require creating a budget to track your earning and spending, so your savings add up quicker.

Eliminate unnecessary spending. The first step is to reduce your unnecessary expenditures across the board and to put that money into your home savings account. This may include reducing your takeout food orders and reducing your monthly recurring costs such as cable, streaming services, or gym membership.

Pay down high-interest debt. Most credit cards charge a high interest rate on outstanding balances. One of the best ways to save for a down payment is to start by paying off the card(s) with the highest APR. Doing so can save you hundreds or thousands of dollars in interest payments.

Increase your income. Taking a second job is another way to put more money in your savings account each month.
Check out these tips to help you save for a home.

Why savvy consumers choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.
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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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