Calculating Downpayment on FHA

For many years we calculated FHA downpayment by way of Acquisiton Cost.  Now… that’s “out the window.”  With the new “revisions” we calculated a “straight” 3.5% as reflected in the Mortgagee Letter below:

·        Closing costs:  Closing costs may not be used to help meet the minimum 3.5% downpayment requirement. Closing costs are not considered in the mortgage amount/downpayment calculation for purchase money mortgages.

This is a huge difference – and if you are working with a loan officer who is not familiar with FHA – you could end up at the closing table needing more money.  Be careful!