Nationwide Mortgage Licensing System (NMLS) Practice Exam

What is the minimum down payment required by the FHA?

1. $0

2. 3.5%

3. 5%

4. 10%

The correct answer is: 3.5%

The minimum down payment required by the Federal Housing Administration (FHA) is 3.5%. This requirement reflects the FHA's goal of making homeownership more accessible, particularly for first-time buyers and individuals with lower credit scores. By allowing a lower down payment, the FHA facilitates easier entry into the housing market for borrowers who may not have substantial savings available for a larger down payment. Additionally, the 3.5% down payment can be sourced from various acceptable funds, such as gifts from family members, which further enhances access for potential homeowners. This down payment requirement is a key feature of FHA loans, distinguishing them from conventional loans that often have higher down payment thresholds. Therefore, the option reflecting a 3.5% minimum down payment provides an accurate representation of FHA guidelines.