FHA loans are one of America's most popular mortgage loan options — and for good reason. They have low credit score requirements, affordable mortgage rates, and a down payment minimum requirement of 3.5%, making them a great option for first-time homebuyers or those who just don’t have much cash saved up.
Could an FHA loan be a good fit for your current financial situation? Here’s how much you’ll need to put down to use one.
FHA Loan Minimum Down Payment
Like most mortgages, FHA loan down payments must be paid upfront and cannot be rolled into your loan payment. Uniquely, FHA loans technically have two different down payment thresholds. The absolute lowest down payment on an FHA loan is 3.5% of the total loan amount, but only if you have at least a 580 FICO® credit score. If your credit score is between 500 and 579, it is still possible to qualify, but you must put 10% down.
Here’s a look at how those down payments break down on a $350,000 loan balance:
| Credit score* | Down payment requirement | Down payment amount |
|---|---|---|
| 580+ | 3.5% | $12,250 |
| 500-579 | 10% | $35,000 |
Although FHA guidelines allow for credit scores as low as 500 with a 10% down payment, many lenders set their minimum credit score requirements higher to reduce risk. Lenders that do accept lower scores may also impose stricter terms, like higher interest rates, additional documentation, or larger down payments.
Neighbors Bank’s current minimum credit score requirement is 620.
Are FHA Loans Always 3.5% Down?
A 3.5% down payment is the absolute lowest down payment found on an FHA loan, but you can also opt to put more down than this. Making a larger down payment could qualify you for a lower interest rate, reduce your monthly payment, and allow you to pay down your loan faster and with less interest costs in the long run.
A higher down payment can qualify you to cancel your FHA mortgage insurance premium after 11 years.
FHA Down Payment MIP Requirements
For FHA loans, the mortgage insurance premium (MIP) requirement depends on your down payment and credit score. There are two types of FHA MIP: upfront and annual. In 2024, the upfront MIP is 1.75% of the loan amount, and the annual mortgage insurance premium (MIP) ranges from 0.45% to 1.05% depending on your loan-to-value (LTV) ratio.
All FHA borrowers have to pay the upfront premium, however, even if you qualify for a 3.5% down payment, you also have to pay annual mortgage insurance for the life of the loan unless you make a 10% down payment at closing. If you make a 10% or more down payment when you close on an FHA loan, you can cancel the monthly MIP after 11 years.
FHA Down Payment vs. Other Mortgage Options
Every mortgage program has its own unique down payment requirements. See below for how FHA loans measure up to other loan types:
| Loan Type | Minimum Down Payment | Typical Credit Score Minimums | Other Important Factors |
|---|---|---|---|
| FHA | 3.5% (with 580+ credit score) | 500+ (10% down for 500-579) | Lenient on credit requires MIP for life if <10% down |
| Conventional | 3% - 20% (varies by lender) | 620+ (varies by lender) | Lower interest with higher down PMI required if <20% down |
| USDA | 0% | 620+ (varies by lender) | Only available in USDA-eligible rural areas, income limits apply |
| VA | 0% | No official minimum (varies by lender) | Only available to eligible veterans, active duty, and certain military spouses |
FHA vs. Conventional Loan Down Payment
Conventional loans require a slightly smaller down payment at 3% than FHA loans. There’s no minimum credit score requirement to qualify for this threshold, though borrowers typically pay for mortgage insurance (MIP) with down payments under 20%.
FHA loans require insurance too, though, and on most loans, you pay for it for the entire loan term. Conventional loans allow you to cancel mortgage insurance once you have a certain amount of equity. For this reason, a conventional loan is typically the better option if you can qualify (but especially if you have enough savings to put 20% down).
See our full guide on FHA vs. Conventional loans here.
FHA vs. USDA Loan Down Payment
USDA loans are mortgages backed by the U.S. Department of Agriculture and can be used on properties in qualifying rural parts of the country. They require no down payment, but you must meet certain income requirements and buy in an eligible area. See the USDA eligibility map to find potential properties in your region.
FHA vs. VA Loan Down Payment
VA loans are a type of mortgage reserved for U.S. military members, Veterans, and their spouses. Like USDA loans, VA loans require no down payment, however, you or your spouse must meet specific service requirements to qualify, which vary depending on when you were in the military and whether it was during peacetime or war.
Other FHA Loan Requirements
The down payment is only one of the many requirements of an FHA loan. You also need a certain credit score (500 to 580, per the FHA, but lenders can ask for higher) and an acceptable debt-to-income ratio. While FHA has flexible DTI ratio requirements, 43% or lower is preferred. This means that your total debt payments, including your new mortgage payment, take up no more than 43% of your monthly income.
The property you’re buying must meet certain requirements as well. It must be a one- to four-unit home or FHA-approved condo, meet the FHA’s safety standards, and serve as your primary residence for at least a year after closing. You need to move into the home within 60 days as well.
FHA Down Payment Assistance Options
If you’re unable to come up with the full down payment required by an FHA loan, there are other options. You can explore:
DPA Programs
State and local housing departments, lenders, community organizations, and other groups offer down payment assistance programs. They can cover some or all of your down payment (and sometimes closing costs) and, in many cases, do not need to be repaid. You typically just need to live in the home for a certain length of time.
Gift Funds
You can also use gift funds from a loved one on FHA loans. Just make sure the donor writes a letter stating that the funds are a gift and do not need to be repaid. You will also need to provide documentation showing the money entering your account as well as a copy of the check or wire transfer.
Seller Negotiations
You can also have your real estate agent negotiate with the home’s seller to cover a portion of your closing costs. While sellers cannot pay your down payment, they can offer concessions in other areas, which can offset your down payment costs and make your purchase more affordable.
