Federal Housing Administration loans, often called FHA loans, offer strong advantages for new and first-time homebuyers. Many buyers choose FHA financing because it lowers the barriers to homeownership and makes budgeting more predictable. One of the first and most important questions buyers ask is how much money they need to save for a down payment.
Understanding FHA down payments
A down payment is a percentage of the home’s purchase price that you pay upfront. Many people believe they must save 20 percent to buy a home, but that rule does not apply to all loans. While some lenders accept down payments of 15 percent, 10 percent, or even 5 percent, FHA loans require far less.
With an FHA loan, you only need a 3.5 percent down payment. This lower requirement allows buyers to enter the market sooner and avoid years of additional saving.
How to calculate your FHA down payment
Calculating your FHA down payment is simple. You multiply the purchase price of the home by 3.5 percent.
For example, if you plan to buy a home priced at $350,000, the calculation looks like this:
$350,000 × 3.5% = $12,250
This means you need $12,250 for your down payment, not including closing costs or other expenses.
How to budget before you choose a home
If you have not started house hunting yet, you can still prepare your budget. Start by deciding the price range that feels comfortable for your finances. Once you know your lowest and highest target prices, you can estimate your down payment range.
For example, if you plan to shop between $320,000 and $375,000, your down payment range would look like this:
$320,000 × 3.5% = $11,200
$375,000 × 3.5% = $13,125
This approach gives you a realistic savings goal and helps you stay focused while shopping.
Important FHA down payment rules
The FHA requires the buyer to provide the down payment. Seller concessions cannot cover this amount. Because of this rule, it’s smart to begin saving as early as possible and aim for the higher end of your estimated range. Saving more gives you flexibility and reduces financial stress at closing.
Extra tools and resources
The FHA offers online loan calculators that help you estimate payments, limits, and affordability. These tools allow you to test different price points and plan ahead with confidence.
For official information, loan programs, and approved lenders, visit the U.S. Department of Housing and Urban Development website. HUD provides reliable resources and lender lists to help you find financing that fits your situation.
An FHA loan can make homeownership achievable sooner than you think, especially when you understand how to plan and save for the down payment.
