What is the minimum down payment required for an FHA loan?

The minimum down payment required for an FHA loan is 3.5%. This option is rooted in the Federal Housing Administration's guidelines, which are designed to make homeownership more accessible to lower and moderate-income borrowers. The FHA allows this lower requirement as a means to encourage individuals who may not have significant savings to still achieve homeownership, particularly first-time buyers.

This smaller down payment is a key feature that differentiates FHA loans from conventional loans, which often require higher down payments to mitigate risk. Additionally, borrowers may only need a credit score of at least 580 to qualify for the 3.5% down payment option, while those with lower scores might still be eligible after making a larger down payment. By offering a 3.5% down payment, the FHA helps open up opportunities for homeownership to a broader segment of the population.