FHA loans require a down payment and they also have closing costs that are tied to them. Just because both of these items are paid at the closing, however, does not mean that they are the same thing. There are different rules that pertain to FHA down payments and FHA closing costs. Understanding the differences and what you need to do about them will help you better navigate the road to an FHA loan.

1. The Difference Between
Down Payment Money
and FHA Closing Costs

2. FHA loans require a down payment and they also
have closing costs that are tied to them.
Just because both of these items are paid at the
closing, however, does not mean that they are the
same thing.

3. FHA Down Payment
Requirements
The first thing to understand about FHA loans is the
amount of the down payment required.
If you have a credit score that is above 580, you are able to
put down as little as 3.5 percent of the price of the home
when you purchase it
If you have a credit score that is less than 580 but higher
than 500, you must put down at least 10 percent of the price
of the home when you purchase it

4. FHA Closing Cost Requirements
The FHA closing cost requirements vary quite a bit based on
your location. The common FHA closing costs that are allowed
include:
Origination fees
Appraisal fees
Title search and insurance fees
Processing or documentation fee
Credit report costs
Inspection costs
Survey fees
Recording fees

5. Who Pays What?
Now comes the hard part – who pays what when it comes
to down payments and closing costs? Typically, it is all up
to the borrower – you pay everything, but there are
exceptions to the rule. As far as the down payment, which
is called the Minimum Required Investment, no interested
parties are able to contribute to it.

6. Interested parties include:
Sellers
Real estate agents
Builders
Anyone else that has an interest in the transaction
and will be compensated financially

7. The Major Difference
As you can see, the main difference between the down
payment or Minimum Required Investment and the closing
costs is the investment in the property. Closing costs have
nothing to do with investment in the property and you do
not recoup those costs after selling the home down the
road. The down payment is money that you directly invest
in the home.

8. Understanding how much money you need to bring to the
closing as well as acceptable sources that it can come from
helps you to be ready for your FHA loan.
When you find the loan that is most affordable to you, then
you can set yourself up for a successful future as a
homeowner with minimal risk for default.

9. Finding the
Best FHA Lender
BestFHALender is a one­stop shop offering useful
information about FHA loans and enabling
customers to shop for multiple lenders.
CLICK HERE TO LEARN MORE

10. Information Provided by
Justin Mchood
He is Americas Mortgage Commentator
and has been providing Mortgage
commentary for over 10 years.

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