FHA New Down Payment and LTV Requirements

Mortgage and Lending

A Special FHA Announcement from FHA Expert Jeff Mifsud

In response to the passing of HR 3221, this update announces FHA's new down payment and LTV requirements.

Here are the 5 things you need to know about these changes...

1. One single down payment requirement of 3.5% for all purchases

2. Closing costs/prepaids are in addition to the 3.5% down (6% seller contribution allowed)

3. New maximum LTVs (based on lower of sales price or value) are:

  • 96.50% for all purchases.
  • 98.28% for all regular rate and term refinances (cash out remains at 95%).
  • 98.52% for all streamline refinances.

4. These changes are effective October 1st, 2008.

5. Purchases already in the pipeline will have until December 31st to be assigned a case number. After January 1st, 2009, all purchases will require the new down payment requirements.


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Steve Graham
Inactive - Atlanta, GA

I read on Inman News that an amendment is in the works that might allow DPA to continue. Any news on that?

Sep 10, 2008 06:20 AM #1
Flemington, NJ

Thanks for the updates and the dates-it usually is a while before an announcement takes effect. 

Sep 10, 2008 06:24 AM #2
Alan Langstone
Mount Pleasant, SC

Hi Karl,

I was also under the impression that Seller gifting/Down payment assistance was to be no more as from the end of September.

Does this mean that it is still allowed?

Could you please elaborate and explain.



Sep 10, 2008 06:51 AM #3
Karl Peidl
Moorestown, NJ
Accredited Loan Consultant

DPAs or Down Payment Assistance programs such as Nehemiah are different than a seller contribution or seller concession.  A DPA is a program that helps the buyer finance closing costs and is paid into by the seller.  A seller concession allows the seller to pay the closing costs directly on the settlement statement at closing out of the proceeds of the sale.  As of right now, FHA will no longer allow DPAs as of October 1, 2008.  Many lenders have already stopped accepting FHA mortgage with a DPA in anticipation of this change.  Currently, there is a movement for an ammendment to keep DPAs alive, but as of now it has passed. 

Stay tuned for further developments...

Sep 10, 2008 10:24 AM #4
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Karl Peidl

Accredited Loan Consultant
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