FHA 203(b) Mortgage With 3.5% Down

At a glance

Amount

Down payment as low as 3.5% of the purchase price, and it can be a gift

Type of help

Other help

Where

Nationwide

Run by

U.S. Department of Housing and Urban Development, Federal Housing Administration (FHA)

First-time buyer

Repeat buyers welcome

Income limit

None

Minimum credit score

500

Homebuyer education

Not required

How the other help works

A special purchase path, discount, or loan type that lowers what you need at closing.

• Monthly payment: Yes

Who qualifies

• Repeat buyers welcome.
• Income. No income cap. FHA limits the loan amount by county instead (checked 2026-09-23).
• Property types: Single-family, Townhouse, FHA-approved condo, 2 to 4 units if you live in one, Manufactured home on a permanent foundation. Must be your primary residence.
• FHA's published floor: a decision credit score of 580 or higher qualifies for the 3.5% down payment. Scores from 500 to 579 require at least 10% down. Lenders may set higher floors.
• The down payment can be a gift from a family member, employer, or charitable organization, and approved down payment assistance can cover it.
• You must live in the home as your primary residence.
• The loan cannot exceed the FHA limit for the county, which is higher in the Washington metro than in most of the country.

How to apply

1. 1Talk to an FHA-approved lender. Any lender can tell you whether it is approved. FHA itself does not take applications.
2. 2Get pre-approved and ask the lender to run the numbers with the down payment program you plan to use, so the assistance and the FHA loan are underwritten together.
3. 3Shop within the FHA loan limit for the county and, for condos, only in FHA-approved projects.
4. 4Write the offer. Sellers can contribute toward closing costs within FHA's limit, and gift funds need a simple gift letter.
5. 5Complete the FHA appraisal, which checks value and basic property condition, then close.

Watch out for

• FHA mortgage insurance has two parts: an upfront premium and a monthly premium. On most loans with less than 10% down the monthly premium lasts the life of the loan. Compare with a 3% conventional option before you decide.
• The 3.5% down payment is the floor, not the total cash. Closing costs and prepaid items are extra unless the seller, a grant, or a lender credit covers them.
• Condos must be on FHA's approved list or qualify for a single-unit approval. Check before you write.
• The FHA appraisal is stricter on property condition than a conventional appraisal. Peeling paint and safety items can become repair conditions.

Straight answers

Sources

• HUD, Let FHA Loans Help You (read Sep 23, 2026)
• HUD FHA Resource Center, How can FHA help me buy a home? (gift sources for the down payment) (read Sep 23, 2026)
• HUD Mortgagee Letter 2010-29, minimum decision credit score and down payment tiers (read Sep 23, 2026)

Program details are summarized from public sources and change without notice. Funding badges reflect the last time we checked, not a guarantee of availability. This is buyer education from a real estate agent, not a loan pre-approval or a commitment to lend. Eligibility is decided by each program administrator and your lender. Equal Housing Opportunity.