One of the many benefits of an FHA loan is the low down payment requirement of 3.5%. On the surface it seems to be a very low down payment, there are many home buyers who still need help to come up with the 3.5% down payment. There are FHA down payment assistance programs that can help to provide some or all of the down payment needed for an FHA loan.
FHA guidelines and HUD allow for FHA down payment assistance to come from a relative or close friend in the form of a gift. You can read our article on FHA gift funds for more info. However, when you do not have a relative to help, you can then reach out to a non-profit or government agency for FHA down payment assistance.
One of the many flexible aspects of FHA loans is that you can use multiple sources to come up with your down payment. This means you can get a gift from a relative plus two or more down payment assistance programs to come up with what you need to purchase the home.
It is important to note that most lenders do not get involved with helping you to find a down payment assistance program. That is something you will need to locate on your own or with the help of your local real estate professional. However, it would be beneficial to discuss your loan options with an FHA lender prior to securing down payment assistance funds. Click to get connected with one of our FHA lenders to discuss your options.
Down Payment Assistance Mortgage Program – New !
We have a limited number of lenders who are now offering a true FHA down payment assistance mortgage program. This will require no upfront down payment but will have additional costs added to your closing which can be financed. Request a quote from us for one of these great mortgages.
FHA Down Payment Assistance Requirements
Required Documentation – FHA Down Payment Assistance
Regardless as to what the source of your down payment assistance money is, HUD will require your lender to provide documentation detailing the source of funds. The documentation must show that the borrower is fulfilling the minimum required investment (MRI) to qualify for an FHA loan. This is especially true when it is a government agency that is providing the down payment assistance.
In a letter from HUD to the lenders, they said in summary: “It has come to FHA’s attention that certain Governmental Entities may be acting beyond the scope of their authority by providing down payment assistance funds in a manner that would violate the FHA Handbook 4000.1 and the National Housing Act”. This is why, effective April 18, 2019 they are requiring these agencies to provide additional documentation.
Does FHA Down Payment Assistance Money Have to be Repaid?
When you receive FHA down payment assistance money, it is often considered a gift or a grant and does not need to be repaid. Keep in mind that with each program, there are rules and conditions tied to receiving the funds. Some of the assistance programs are actually a loan where the funds do need to be repaid at a much lower interest rate. Therefore, make sure you read through the documentation completely to fully understand what the requirements are and whether repayment is required.
How Long Will it Take to Get FHA Down Payment Assistance Funds?
Every down payment assistance program is different. Some are grants and other are loans. In both instances, you will need to apply for them and the response and approval times will vary. We suggest that you contact the agency and ask lots of questions including how long it takes to get the funds. You could be prepared to wait anywhere from 60-90 days.
List of FHA Down Payment Assistance Programs for 2021
Below are some examples of the many down payment assistance programs available today. This is just a small sampling that we researched here at FHA Lenders and it is not a complete list. It will be up to you to research these options and also find additional FHA down payment assistance programs. Then, weigh them against one another and determine which is best for you. We will do our best to keep this list updated for you.