mortgage

7 crucial facts about FHA loans

Mortgage » 7 Crucial Facts About FHA Loans

Minimum down payment is 3.5 percent
Minimum down payment is 3.5 percent © Andy Dean Photography/Shutterstock.com

Minimum down payment is 3.5 percent

For most borrowers, the FHA requires a down payment of just 3.5 percent of the purchase price of the home. That's a "huge attraction," says Dennis Geist, senior director of compliance and fair lending at Treliant Risk Advisors and formerly a vice president of government programs for another lender. In late 2014, Fannie Mae and Freddie Mac reduced minimum down payments to 3 percent from 10 percent, but such loans have limited availability.

FHA borrowers can use their own savings to make the down payment. But other allowed sources of cash include a gift from a family member, or a grant from a state or local government down payment assistance program.

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