Last Updated: February 2026

The FHA loan down payment is one of the biggest advantages of the Federal Housing Administration mortgage loan program. FHA loans require a down payment as low as 3.5% of the purchase price — among the lowest FHA loan down payment requirements of any mortgage program available to the general public. For many first-time homebuyers looking to buy a home, the FHA down payment options make homeownership financially possible even with a lower credit score.

This guide covers everything about FHA down payment requirements: how much you need, where the funds can come from, how gift funds work, credit score requirements that affect your down payment, and the many down payment assistance programs and payment options that can help you qualify for an FHA loan and get into a home with little to no money out of pocket. Whether you have a credit score of 580 or are exploring FHA guidelines for the first time, understanding your FHA mortgage and FHA loan options starts with the down payment. FHA loan down payments are significantly smaller than what most conventional programs require.

How Much Is the FHA Down Payment?

The FHA down payment amount depends on your credit score:

Most FHA borrowers have credit scores above 580 and qualify for the 3.5% minimum. FHA loans require mortgage insurance regardless of down payment size, and your mortgage payment will include both principal/interest and a monthly MIP premium. According to recent data, the average FHA borrower puts down approximately 3.5-4.5% on their home loan, making FHA the go-to mortgage loan program for buyers with limited savings who want to buy a home.

FHA Down Payment vs Other Loan Programs

While VA and USDA loans offer zero-down options, they have eligibility restrictions (military service for VA, rural areas for USDA). For the general population, the FHA loan offers the lowest widely available minimum required down payment option with the most flexible payment and credit score requirements. If you want to apply for an FHA loan, the low down payment makes FHA one of the most attractive loan programs. The smaller down payment compared to conventional loans means more buyers can enter the market sooner.

Acceptable Sources of FHA Down Payment Funds

The FHA is more flexible than conventional loans about where your down payment money comes from. Here are all the acceptable sources:

Personal Savings and Checking Accounts

The most straightforward source. Your lender will review 60 days of bank statements to verify the funds are available and to trace any large deposits. Tips for documenting personal savings:

• Provide all pages of bank statements — even blank pages
• Any deposit over 1% of the purchase price must be documented with a paper trail
• Avoid moving money between accounts in the 60 days before applying — it creates documentation headaches
• Do not accept cash deposits from others before or during the loan process

Gift Funds from Family

One of the most powerful features of FHA loans is that 100% of your down payment can come from gift funds. Acceptable gift donors include:

• Family members (parents, grandparents, siblings, children, spouse)
• Employers or labor unions
• Close friends with a clearly defined relationship
• Charitable organizations
• Government agencies

To use gift funds, you need a gift letter that includes:

1. The donor's name, address, and phone number
2. The donor's relationship to the borrower
3. The dollar amount of the gift
4. A statement that the funds are a gift and no repayment is expected
5. The donor's signature and date
6. The property address

The lender will also need to see the donor's bank statement showing the withdrawal and the borrower's bank statement showing the deposit. The gift must be fully documented with a clear paper trail.

Retirement Account Withdrawals

You can use funds from retirement accounts for your FHA down payment:

• 401(k) loans: Borrow from your 401(k) without tax penalties. The repayment is counted as a monthly debt in your DTI calculation.
• 401(k) hardship withdrawal: Direct withdrawal may incur a 10% early withdrawal penalty plus income taxes if you are under 59½.
• Traditional IRA: First-time homebuyers can withdraw up to $10,000 without the 10% early withdrawal penalty (income taxes still apply).
• Roth IRA: Contributions (not earnings) can be withdrawn at any time without taxes or penalties. Earnings may be withdrawn penalty-free for a first home purchase (up to $10,000 lifetime limit) after a five-year holding period.

Sale of Personal Property

Proceeds from selling personal assets can fund your FHA down payment if documented properly. Acceptable items include:

• Vehicle sold through a documented transaction
• Jewelry, art, or collectibles sold with receipts
• Other personal property with documented proof of sale

You need proof of ownership (title, receipt), proof of sale (bill of sale, buyer's check), and deposit records showing the funds entering your account.

Employer Assistance Programs

Some employers offer down payment assistance as a benefit to employees. These programs may include:

• Direct grants toward the down payment
• Forgivable loans (typically forgiven if you stay employed for a set period)
• Matched savings programs

Employer-assisted housing programs are fully acceptable for FHA down payments. The lender will need documentation from the employer confirming the assistance.

FHA Down Payment Assistance Programs (DPA)

Down payment assistance (DPA) programs are offered by state and local governments, housing finance agencies, and nonprofit organizations to help homebuyers cover the FHA down payment. These programs can make the difference between renting and owning.

Types of Down Payment Assistance

Grants: Free money that does not need to be repaid. Grants are the most favorable form of DPA and are typically funded by state housing finance agencies or local governments. Common grant amounts range from $5,000 to $25,000 depending on the program and location.

Forgivable Loans (Second Mortgages): A second mortgage that is forgiven after a set period — usually 5 to 10 years — as long as you remain in the home as your primary residence. If you sell or refinance before the forgiveness period ends, you must repay all or a portion of the loan.

Deferred-Payment Loans: A second mortgage with no monthly payments required. The loan becomes due when you sell, refinance, or no longer use the home as your primary residence. These loans may or may not accrue interest.

Matched Savings Programs (Individual Development Accounts): You save money in a special account, and the program matches your savings at a ratio of 2:1 or 3:1. After a savings period (usually 12-24 months), the combined funds can be used for your FHA down payment.

State Housing Finance Agency Programs

Every state has a housing finance agency (HFA) that offers down payment assistance. Here are some notable examples:

Program availability, amounts, and requirements change regularly. Contact your state's housing finance agency or ask your FHA-approved lender about current DPA programs available in your area.

How to Find Down Payment Assistance in Your Area

1. Ask your lender: Experienced FHA lenders know which DPA programs are available locally and can help you apply
2. Contact your state housing finance agency: Every state has one — search "[your state] housing finance agency"
3. Search HUD's local resources: Visit HUD.gov and search for homebuyer assistance in your area
4. Check with your city or county: Many municipalities offer their own DPA programs
5. Talk to housing counselors: HUD-approved housing counseling agencies provide free guidance on available programs

Eligibility Requirements for DPA Programs

Most down payment assistance programs have eligibility criteria that may include:

• Income limits: Typically 80-120% of area median income (AMI)
• First-time homebuyer status: Many programs require you to be a first-time buyer (have not owned a home in three years)
• Homebuyer education: Completion of a HUD-approved homebuyer education course (often free and available online)
• Minimum credit score: Usually 620-640 for DPA programs
• Purchase price limits: The home price must fall within program limits
• Occupancy: Must be a primary residence

Can the Seller Pay My FHA Down Payment?

No. The home seller is not allowed to contribute to the borrower's down payment on an FHA loan. This is a firm FHA rule — any arrangement where the seller funds the buyer's down payment directly or indirectly is prohibited and can result in loan denial or fraud charges.

However, the seller can help with your overall closing costs:

• Seller concessions: The seller can contribute up to 6% of the purchase price toward the buyer's closing costs, prepaid items, and discount points
• Seller concessions cannot be applied to the down payment itself
• Concessions that exceed actual closing costs cannot be refunded to the buyer as cash

This distinction is important: the seller can help with closing costs (reducing your total out-of-pocket expenses), but the down payment must come from the buyer, family gifts, or approved assistance programs.

Benefits of a Larger FHA Down Payment

While 3.5% is the minimum, putting more money down on your FHA loan has significant advantages:

10% Down Eliminates Lifetime MIP

If you put 10% or more down on your FHA loan, the annual mortgage insurance premium (MIP) drops off after 11 years instead of lasting the life of the loan. This can save tens of thousands of dollars over the life of your mortgage.

Lower Monthly Payments

A larger down payment means a smaller loan amount, which reduces your monthly principal and interest payment. On a $350,000 home:

• 3.5% down: ~$2,116/month (P&I) + $155 MIP = ~$2,271
• 10% down: ~$1,974/month (P&I) + $144 MIP = ~$2,118
• Monthly savings: ~$153/month = $1,836/year

Better Loan-to-Value Ratio

A lower LTV means you start with more equity in your home, which:

• Provides a larger cushion against declining home values
• Enables you to refinance sooner into a conventional loan to eliminate MIP
• May help you qualify for a lower interest rate

FHA Down Payment Strategies

Here are proven strategies to accumulate your FHA down payment faster:

Strategy 1: Automate Your Savings

Set up an automatic transfer from your checking account to a dedicated savings account every payday. Even $200 per paycheck accumulates to $10,400 over two years — enough for 3.5% down on a $297,000 home.

Strategy 2: Combine Gift Funds with Savings

If you have saved some money but not enough, ask family members to help with the remainder. Since FHA allows 100% gift funding, any combination of personal savings and gifts works. Just ensure proper documentation for both sources.

Strategy 3: Stack Multiple Assistance Programs

In many areas, you can combine multiple DPA programs. For example:

• State HFA grant covering 3% of the purchase price
• City or county forgivable loan covering an additional 2%
• Combined, these could cover your entire down payment and part of closing costs

Ask your lender which programs can be layered together in your area.

Strategy 4: Use Roth IRA Contributions

If you have a Roth IRA, your contributions (not investment earnings) can be withdrawn at any time without taxes or penalties. This is essentially a tax-advantaged savings account for your down payment.

Strategy 5: Negotiate Seller Concessions for Closing Costs

While the seller cannot pay your down payment, they can cover up to 6% of closing costs. If the seller pays all your closing costs, you only need to save for the 3.5% down payment, significantly reducing your total cash needed at closing.

Strategy 6: Reduce the Purchase Price

A lower purchase price directly reduces your required down payment:

With seller concessions covering closing costs, these numbers drop to just the down payment column.

FHA Down Payment Documentation Requirements

Proper documentation is critical for FHA down payment approval. Here is what your lender needs:

For Personal Savings

• 60 days of bank statements (all pages, all accounts)
• Explanation letter for any deposit exceeding 1% of the purchase price
• Supporting documentation for each large deposit (pay stub, tax refund notice, sale receipt)

For Gift Funds

• Signed gift letter with required information (donor details, amount, no-repayment statement)
• Donor's bank statement showing the withdrawal
• Borrower's bank statement showing the deposit
• Wire transfer receipt or cashier's check copy (if applicable)

For Down Payment Assistance

• DPA approval letter from the program administrator
• Program terms and conditions documentation
• Evidence of funds being available at closing (subordinate lien documentation if applicable)

For Retirement Account Withdrawals

• Retirement account statement showing available balance
• Documentation of withdrawal or loan approval
• Evidence of funds deposited into your bank account

Common FHA Down Payment Mistakes to Avoid

1. Undocumented cash deposits: Cash deposits in your bank statements that cannot be traced create major problems. Avoid depositing cash in the months before and during your loan process.
2. Moving money between accounts: Transferring funds between your own accounts creates a documentation puzzle. If you must consolidate, do it well before applying and keep records of every transfer.
3. Using funds from prohibited sources: Down payment money from the seller, real estate agent, or a personal loan disguised as a gift will result in loan denial.
4. Missing the gift letter: Even if a family member genuinely gives you the money, without a properly formatted gift letter and paper trail, the lender cannot accept the funds.
5. Spending reserves before closing: After your lender verifies your assets, avoid large purchases or withdrawals. The lender may re-verify your accounts before closing.
6. Not researching DPA programs: Thousands of dollars in free money go unclaimed each year because buyers do not know about down payment assistance programs in their area.
7. Confusing down payment with closing costs: The down payment and closing costs are separate expenses. Budget for both (or negotiate seller concessions for closing costs).

FHA Down Payment FAQs

Can I get an FHA loan with zero down payment?

Technically, no — the FHA requires a minimum 3.5% down payment. However, if you combine a 100% gift-funded down payment or down payment assistance grants, you may need zero money out of your own pocket. The 3.5% must come from somewhere, but it does not have to come from your savings.

Can I use a personal loan for my FHA down payment?

No. Personal loans, credit card advances, or any borrowed funds (other than approved programs) cannot be used for the FHA down payment. However, 401(k) loans are an exception — they are considered borrowing from yourself.

How do I prove my down payment for an FHA loan?

Provide 60 days of bank statements showing the funds are available and seasoned. Any large deposits must be documented with a paper trail (pay stubs, gift letter, sale receipts). The lender traces every dollar to an acceptable source.

Can my employer pay my FHA down payment?

Yes. Employer-assisted housing programs are an acceptable source of FHA down payment funds. The employer can provide grants, forgivable loans, or matched savings. This must be documented with a letter from the employer.

Do I get my FHA down payment back if the deal falls through?

If you provided earnest money (which is separate from the down payment), the return depends on contract contingencies. The down payment itself is not paid until closing. If the deal falls through before closing, you have not yet paid the down payment and your funds remain in your account.

Can I use cryptocurrency proceeds for my FHA down payment?

Yes, but the funds must be converted to US dollars, deposited in a bank account, and documented with 60 days of bank statements. The lender will need documentation of the crypto sale and deposit. Crypto held in a wallet cannot be used directly — it must be in a bank account.

Summary: FHA Loan Down Payment Guide

The FHA down payment makes homeownership possible for millions of buyers who cannot afford large upfront costs. Key takeaways:

• Minimum: 3.5% with a 580+ credit score, 10% with a 500-579 score
• Gift funds: 100% of the down payment can come from family gifts with proper documentation
• Assistance programs: State and local DPA grants, forgivable loans, and matched savings programs can cover part or all of the down payment
• Seller contributions: Up to 6% toward closing costs (not the down payment itself)
• 10% down advantage: Eliminates lifetime MIP, saving tens of thousands over the loan
• Documentation: 60 days of bank statements, gift letters, and paper trails for all funds

FHA Down Payment FAQs

How much is the FHA loan down payment?

The minimum is 3.5% with a credit score of 580 or higher. Scores between 500 and 579 require 10% down. On a $300,000 home, that is $10,500 with qualifying credit.

Can I get an FHA loan with no down payment?

FHA loans always require at least 3.5% down, but you can cover it entirely with gift funds, down payment assistance programs, and seller concessions for zero out-of-pocket costs.

Can I use gift money for an FHA down payment?

Yes. FHA allows 100% of the down payment from gift funds. Acceptable donors include family, employers, labor unions, and charitable organizations. A signed gift letter is required.

What are FHA down payment assistance programs?

DPA programs are grants or forgivable loans that cover your down payment and closing costs. Every state offers them through housing finance agencies. Many provide $5,000 to $25,000 for first-time buyers meeting income requirements.

Does putting more down on an FHA loan save money?

Yes. Putting 10% or more down means your annual mortgage insurance drops off after 11 years instead of lasting the full loan term. This can save over $30,000 on a $300,000 loan.