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Ever increasing expenses and low yields on savings accounts can make it difficult to save for a home. Here are some ideas for boosting savings and finding sources for meeting your FHA loan down payment and closing costs.

Your FHA Home Loan: Funding Your Down Payment and Closing Costs

FHA offers a low minimum down payment of 3.5 percent of your new home's purchase price, but you'll also need funds for paying closing costs. Here are some ideas for saving and raising money to meet these expenses.

FHA Guidelines Can Help

FHA allows home sellers to contribute toward allowable buyers closing costs. Keep this in mind when making your purchase offer; your real estate agent can provide details and suggest a strategy for making an offer.

FHA guidelines permit home buyers to use cash gifts toward their down payment and paying closing costs; if this is not an option, please consider these ideas:

FHA Mortgages: Saving for Your New Home

Ask friends and family to donate to your home savings in lieu of gifts and gift cards: Asking for money can be a touchy issue, but your loved ones will likely agree that buying a home is a worthy goal.

  • Direct overtime earnings to home savings: If your job provides overtime pay, work extra hours when you can and add your overtime pay to your home savings.
  • Take on a part-time job dedicated to home savings: Direct all income from part-time or one-off jobs to your home savings account. Do the same with proceeds from garage sales and other extra income.Direct overtime earnings to home savings: If your job provides overtime pay, work extra hours when you can and add your overtime pay to your home savings.
  • Deposit "found" funds into your home savings: Dedicate tax refunds, bonuses, miscellaneous refunds, and any other unexpected windfalls to your home savings.

Research First-time Buyer Programs

FHA guidelines also permit contributions from FHA-approved state and local first-time buyer programs to be used for meeting down payment and closing cost obligations. These agencies usually provide low- to no-cost loans that require minimal or no payments as long as you reside in the home you're buying. FHA lenders and real estate pros can help you locate housing finance programs in your area.


Karen Lawson
Karen Lawson is a freelance writer with extensive experience in mortgage banking and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.