What percentage down payment is required for FHA loans?

FHA loans, or Federal Housing Administration loans, are designed to assist buyers, especially first-time homeowners, in obtaining financing with less stringent credit requirements and lower down payment options. The down payment requirement for FHA loans is set at 3.5% of the purchase price of the home. This relatively low down payment makes homeownership more accessible, as it allows buyers to secure a mortgage with less upfront cash compared to conventional loan options, which typically require a higher percentage down.

This 3.5% requirement is important because it encourages home ownership and makes it feasible for more people to enter the housing market. FHA loans also cater specifically to those with lower credit scores or limited credit histories, offering a path to homeownership that might not otherwise be possible without significant savings for a larger down payment.