FHA Minimum Down Payment Increasing January 1, 2009

With the passage of HR 3221, the minimum required investment of a home buyer utilizing a FHA insured mortgage is increasing from roughly 3% to 3.5% effective January 1, 2009.  You may think this sounds like small change, but with larger loan amounts, this adds up.

For example, if a home buyer is utilizing a FHA Jumbo and they are buying a home priced at $500,000.   Their current minimum required down payment of 3% is $15,000.  Effective January 1, 2009, the minimum required down payment of 3.5% is $17,500; a difference of $2,500 for the amount required to invest into the transaction.   With a home priced at $300,000; the current required investment from the buyer would be $9,000.  As of January 1, 2009, the new amount required will be $10,500.

What does this mean to you?

If you are planning to buy a home utilizing a FHA insured mortgage, be aware of the changes to the minimum down payment requirements.   After December 31, 2008, you'll be required to come up with additional funds towards your down payment which may be a gift or loan from family members.

If you are wanting to take advantage of the lower down payment requirement, meet with a Mortgage Professional who is qualified to provide FHA loans (not all loan originators are, you can check HUD's site to verify).

If you would like me to provide la rate quote for a FHA mortgage on a home located anywhere in Washington, please click here.

Editors Note: this post wass been modified to correct the effective date.


  1. Rhonda,
    Doesn’t it feel like this goes against what the government is trying to do? It is hard enough for first time buyers to come up with the 3% with closing costs put in. I just have to wonder how adding that .5% and not allowing .75% of gift money is going to help anything? This is a perfect opportunity for a first time home buyer to get in and afford a home without the inflated priced and now HR 3221 is making it more difficult. It is so frustrating.

  2. I noticed that the seller-fund DPA programs have been banned effective on 10/01/08. However, this does not prevent buyers obtaining gifts from relative and charitable organizatins (if the gifts were directed to the buyer), and employer. Is there a list of charities that provide such gifts directly to the homebuyer and the gifts are immediately available? Thank you.

  3. We are planning a move there and want to buy a 3 or 4 unit property. We heard the downpayment is more for these homes – 15% down I think. Is that true? We want to live in one and rent the other 2/3.

  4. samantha, FHA allows minimum down payments (3.5%-5%) for 2-4 units. You must occupy one of the units to qualify for the program. You can’t beat it.

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