IF I am buying a home with an FHA loan I am required to put 3.5% down. Is that money used to pay my closing costs on the HUD? Or does that mean I put

Asked by Confused???, Savannah, GA Mon Dec 28, 2009

3.5% down and then have to pay closing costs on top?

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Jonathan Rai…, Agent, Macon, GA
Wed Dec 30, 2009
More succinctly, your 3.5% down is cash you must bring to closing, AND then you add on closing costs.

As others have said, you can get up to 6% from a seller to cover the closing costs! That's a great benefit to the FHA loan.

Good luck in your search!
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William Pola…, Mortgage Broker Or Lender, Suwanee, GA
Tue Dec 29, 2009
You may also be able to find a HUD repo and buy it for $100 down. The bank will pay 3% of the closing costs, so using Josh's example, you'd pay the remainder. We do work with a bank that will finance the other 3%, so your investment can be minimal. On this type of loan, the bank will also pay to fix up to $5000 in repairs for the house at their discretion (to make the house FHA compliant). You may also apply for a 203K loan where you can request up to 110% of the after-repair value of the home. This also may be a $100 down investment or if it's not HUD owned, 3.5% investment. If you prefer to live out in the sticks, you may qualify for a USDA loan (100% financing). Also, if you're a veteran, you may also qualify for 100% financing.
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Hank Miller, Agent, Alpharetta, GA
Tue Dec 29, 2009
Josh laid it out pretty clear - your down payment and closing costs are two seperate items. Make certain that your agent writes a strong contract and asks the seller to pay all or most of your closing costs.

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Joshua Jarvis, Agent, Duluth, GA
Tue Dec 29, 2009
It's easier to look at an example I think.

Say you are buying a home for $100,000.
It will cost you about $3,500 in closing costs to get a loan for this home. Closing Costs are defined as COSTS/FEES associated with getting a loan.
What makes it so confusing is that FHA wants 3.5% down, which incidentally is about the average cost of closing costs (before the gallery gets too upset, I've seen closing costs be as high as 6%)

SIDEBAR! - Closing Costs - This can include your loan officers "commission," loan junk fees, insurance, attorney/title fees, mortgage insurance premium (an insurance you pay for the lender so if you fail to pay the get their money back, well most of it), and some other smaller fees.

OK BACK TO YOUR EXAMPLE, you buy a $100,000 PLUS you have about $3,500 in closing costs, so your total is $103,500. At the closing you'll be asked to bring about $3,500 for a DOWN PAYMENT. HOPEFULLY, your agent negotiated some closing costs, but if they didn't your loan amount would be about $100,000 in this example.... and depending on your situation, you might have to bring the full $3,500 down payment AND the $3,500 in closing costs.

As a note, the DOWN PAYMENT is supposed to be money that is your money "in the game." As in you bought a $100,000 home with $3,500 essentially. This is why real estate is the coolest investment in the world.
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Kathy Weber, Agent, Murrieta, CA
Mon Dec 28, 2009

Prior to you receiving a HUD from escrow, all fee's, recurring and non-recurring costs, inspections, closing costs, home warranties, plus anything you would like to ask for as a buyer is written in your Purchase Agreement and negotiated with the Seller.

In today's market, it is customary to ask for at least 3% of the selling price to go towards the buyer's closing costs. There are always exceptions to the rules but we push for our buyer's.

As a Realtor, I try and write the cleanest offer possible for my client's so they have an opportunity to purchase their homes quickly. For the most part, I ask for closing costs for most properties.

Again, if there are issues with the offer, you can always counter - negotiation is the key to success with many offers.

Best of luck!
Web Reference:  http://weberhomes.INFO
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Jinan Lamas…, Agent, avannah, GA
Mon Dec 28, 2009
this is spelled out in your contract,but you probably will need to pay closing costs as well. Your agent can answer this for you quickly!
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Al Akerman, Mortgage Broker Or Lender, Lakewood, NJ
Mon Dec 28, 2009
You would have to pay closing costs in addition to the 3.5% downpayment.

However, the seller can pay your closing costs up to 6% of the purchase price. Once you have a realtor you can ask them to negotiate into any offer that the seller should pay your closing costs. This is very common.

I hope this was helpful.

Good luck.
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