What are the down payment requirements when purchasing a property using FHA-insured financing?

The borrower must make a minimum required investment (MRI) of at least 3.5 percent of the adjusted value of the property.  MRI refers to the borrower’s contribution in cash or its equivalent required by Section 203(b)(9) of the National Housing Act, which represents at least 3.5 percent of the adjusted value of the property.    The Mortgagee is not permitted to use closing costs to help the borrower meet the MRI.  Premium pricing may be used to pay a borrower’s actual closing costs and/or prepaid items. 

For additional information see Handbook 4000.1 II.A.2.a.iv; II.A.2.c.ii; II.A.4.d.i(B)(2)(h); II.A.5.c.i(B)(2)(h); II.A.6.a.x available at  https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04365