FHA 203k Down Payment

The HUD FHA 203K loan, used for purchasing and renovating a property, requires a minimum down payment of 3.5%, similar to the FHA 203(b) loan that doesn't include additional rehab funds. However, the calculation of the down payment differs for the FHA 203K loan.

The down payment calculation is based on the following factors:

1. The “Contract Price”
2. The current “As-Is Value”
3. The “Repair-Rehab-Renovation Amount” being requested, including all allowable costs associated with the improvements
4. The “After Improved Value”
5. 110% of the “After Improved Value”

What Is The Minimum Needed?

The minimum FHA 203K down payment is determined after figuring out the different factors. The “Contract Sale Price” or the “As-Is Value,” plus the rehab portion, including all related rehab costs, or 110% of the after improved value whichever is less. Once these figures are determined, the 3.5% minimum down payment is applied, resulting in the base mortgage amount.

For an FHA 203K purchase, the down payment is calculated based on the following total: the contract sale price agreed upon by you and the seller, plus the cost of any desired or necessary improvements, as well as the associated costs, fees, and reserves related to both the improvements and the 203K loan. Once you have this total, you can then calculate 3.5% to determine your down payment.

Here's An Example:

FHA loans are well-known for their low down payment requirements, but did you know that the down payment can also come from gifted funds? That’s right! You can purchase your new home with the lowest down payment available, and it can even be provided by someone else. Additionally, the seller can cover the closing costs.

If you're in the market to buy a property, an FHA 203K Loan might be the perfect option for you. With its low down payment, low interest rate, and "All in One" financing, a 203K loan allows you to transform the house you're buying into the home you've always wanted—without depleting your savings.