Mortgages backed by the Federal Housing Administration — known as FHA loans — have more generous eligibility minimums than conventional loans, but they still require a down payment and ongoing monthly payments. It can be difficult to save for a down payment when you’re trying to keep up with your other bills and pay down existing debt. Also, if your financial situation changes after you decide an FHA loan is right for you, you may have trouble affording your payments.
If you’re trying to get an FHA loan but you don’t quite meet the requirements, then you still have options. There are programs available to help you get approved for an FHA loan and pay it back on time.
Down Payment Assistance
Down payment assistance and grants are available to help first-time homebuyers come up with the 3.5% down payment required for an FHA loan. Many of these programs are operated by state or local governments, as well as nonprofit organizations.
Down payment assistance programs tend to be geared toward helping low- and moderate-income borrowers become homeowners. Some programs are specifically for homebuyers who work in public service, such as teachers or firefighters.
The Consumer Financial Protection Bureau offers an online tool to help you explore down payment assistance programs available in your area.
If you have a family member or friend helping you make a down payment, their cash gift needs to meet government rules for you to use it with an FHA loan.
Gifts are defined as having no expectation of repayment, and must come from an acceptable source, such as:
- A relative.
- An employer or union.
- A friend with a defined and documented interest in the borrower.
- A government agency.
- A charity.
The gift cannot come from any party with an interest in the sale, such as the seller, a builder, or a real estate agent.
Help With Payments
The FHA offers programs for homeowners facing financial hardship. One option is a forbearance plan that temporarily pauses or reduces your monthly payment if you lose your job. There also are loan modification programs that allow you to extend your loan term to lower your monthly payment.
For more information on getting help with your FHA mortgage payments, visit the Department of Housing and Urban Development.
Here are answers to some common questions about how to get FHA loan assistance and relief.