FHA 203(k) Down Payment Requirements

How Much Down Payment Is Required for an FHA 203(k) Loan?

FHA 203(k) typically allows as little as 3.5% down with qualifying credit. On Limited 203(k) Streamline, purchase LTV is capped at 96.5% of after-repair value and rate/term refinance at 97.75% — calculated on the combined purchase-and-rehab structure, not just the listing price.

FHA 203(k) Down Payment Options

Your cash-to-close depends on credit tier, LTV on after-improved value, and what sits outside the rehab escrow.

3.5% down (purchase)

Common path with qualifying credit. Limited 203(k) purchase max LTV: 96.5% of after-repair value.

Rate/term refinance

Limited 203(k) rate/term refinance max LTV: 97.75% of after-repair value.

Minimum loan ($100k)

Limited 203(k) requires a minimum loan amount of $100,000.

~10% down

May apply when scores sit in lower FHA tiers or overlays require more equity — still FHA-insured when allowed.

Gift-assisted

Eligible gift funds can cover some or all of the required investment when FHA gift documentation is complete.

Seller credits

Seller-paid closing costs can reduce cash needed at closing within FHA concession caps — they do not replace the minimum investment.

Rehab inside the loan

Eligible improvements and required contingency are typically financed in escrow, not stacked on top of your down payment.

Cash for exclusions

Pools, luxury extras, and other ineligible items must be paid separately if you still want them done.

How Lenders Size Your Cash

FHA 203(k) underwriting looks at the total mortgage amount needed for acquisition and eligible rehab, then applies FHA LTV limits against the after-improved appraisal. That is why a $250,000 purchase with $40,000 of rehab is not “3.5% of $250,000” in isolation.

•Limited 203(k) purchase max LTV: 96.5% of after-repair value; rate/term refi max: 97.75%

•Minimum Limited loan amount: $100,000; maximum per FHA county limits (high-balance allowed)

•UFMIP may be financed; annual MIP affects monthly payment, not just cash-to-close

•Closing costs and prepaids are separate from the minimum down payment

•Limited vs Standard path changes consultant and contingency costs inside the loan

Cash-to-Close Checklist

Minimum required investment

Typically 3.5% (or higher if overlays/score require it) on the FHA-defined base.

Closing costs & prepaids

Origination, title, escrow deposits for taxes and insurance — often partially offset by seller credits.

Ineligible scope items

Anything cut from the 203(k) escrow that you still want done needs separate cash.

Reserves when required

Some files need documented reserves after closing — especially multi-unit primary residences.

FHA 203(k) vs. HomeStyle Down Payment

Factor	FHA 203(k)	HomeStyle
Limited purchase LTV	96.5% of ARV	Varies by occupancy
Limited rate/term refi LTV	97.75% of ARV	Varies by occupancy
Primary residence down	As low as 3.5%	5% standard / 3% HomeReady
Second home / investment	Generally not available	Higher down payments apply
Mortgage insurance	MIP — often life of loan under 10% down	PMI — cancellable with equity
Gift funds	FHA gift rules	Conventional gift rules

Frequently Asked Questions

Is the 3.5% based on purchase price or purchase plus rehab?

Plan on the total FHA acquisition cost structure — purchase plus eligible renovations — against after-improved value. Your cash requirement is not just a percentage of the listing price.

Can I use gift funds for an FHA 203(k) down payment?

Yes, when FHA gift rules are met — typically from an eligible donor with a gift letter and documented transfer of funds. Family help is common on FHA purchases.

Do I need extra cash beyond the down payment?

Often yes. Closing costs, prepaid items, and any ineligible renovation items paid outside escrow sit on top of the down payment. Contingency reserves for rehab are usually inside the loan when allowed.

When would I need more than 3.5% down?

Lower credit tiers, certain lender overlays, or structures that cannot support maximum LTV on after-repair value can require more cash. Purchase LTV is capped at 96.5% and rate/term refinance at 97.75% on both Standard and Limited. Scores in the 500–579 range often need about 10% when the lender allows that path at all.