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Create A BlogFHA Down Payment 3% or 3.5% - Neither! |
Posted at Denver Real Estate by Michael Shotnik
Oct. 10, 2008
Michael Shotnik
Mortgage Banker
Denver, CO
Link: denver1stmortgage.com
FHA Down Payment Confusion
With new FHA changes (HR 3221) taking affect on October 1st there has been a lot of confusion regarding the down payment required for FHA loans. A lot of realtors were informed that starting October first the minimum down payment would be 3.5%. THIS IS NOT TRUE! The 3.5% minimum down payment will not take effect until January 1st 2009.
Given that Colorado is a low closing cost state the minimum down payment until Jan. 1st 2009 is as follows:
|
Lower of Sales Price/Appraised Value
|
Down Payment
|
|
$50,000 or less
|
1.25%
|
|
$50,001 to $125,000
|
2.35%
|
|
$125,001 or greater
|
2.85%
|
As you can see above the minimum down payment isn’t even 3% regardless of the purchase price!
FHA is a wonderful program for first time homebuyers as well as seasoned buyers. The rates are better than conventional financing and the required down payment is much less. When the 3.5% required down payment goes into effect FHA will still be more advantageous than conventional financing.
Eligible source of down payment assistance:
-gift from family member
-gift from employer
-loan from family member (must disclose the terms of the loan)
Michael Shotnik
Mortgage Banker
Link: denver1stmortgage.com
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