Closing Costs (on a FHA Loan)

20 Replies

Hi everybody!

I am doing some research on the "cost to buy a home" within a FHA loan.

Besides the downpayment, we have those closing costs.

As i am looking in FL with a credit score of 720/730 how much would that be?

Any other costs to include besides also a home inspection?

Anyone who could help?

Thank you

If you are buying a single unit property, tou do not want to use an FHA loan. Use a conventional home ready loan.

Hi Brian!
Good morning.

I ment to say "a primary" residence.
I researching wat is best for my situation now.
Therefore I was wondering besides the down payment how much do I need to have to pay closing costs, appraisal, home inspection, etc...
Am I missing another costs?
Thank you for your time

Get a preapproval from a lender and ask them specifically for your situation and price point. And, as always, you can ask the seller to pay for some of the closing costs. 

Hi Anthony,

Thank you for participating!

I for sure will.
I am planning to buy next year, around this time. That's why I am trying to have a better view of how much I "at least" need to have for the down payment and other costs that come with buying a home.
I guess it could also hurt my credit if I go now to the bank or lender already for a pre aprovement?
As I calculate I have to put $20000 a side for the down payment of a house of the price range I am looking at and another $7000 (+-) for extra costs.
Does this sounds realistic?
For sure I will try to negotiate with the seller but as there is no guarantee for this agreement I want to be prepared for the extra costs.

@Diana Bakema I would absolutely go to a lender now and find out where  you sit. I would always rather know if there's anything on my credit that needs to be "cleaned up" now, rather than find out right before you're about to start looking for a house. There is no bad news, only news that can be fixed over time. There are many stories wherein people went to apply for a mortgage and discovered they were a victim of identity theft. Be prepared and know ahead of time! 

A simple request for a credit check for a mortgage is not going to hurt your credit. Keep in mind however, that pre approvals are only good for a short period of time, like say 30-45 days. In other words, don't get a preapproval letter today and think you can buy a new car and get credit card debt because you're holding that letter. Nothing is done until it's done.  Of course, if you get preapproved now, when you want to start looking to buy, you'll only need to freshen up the information, such as; bank statements, tax returns, W2's, investment statements, etc.

FHA loan requires 3.5% down. You haven't said the price range you'd like, but if you think you need $20,000 down, that's a $571,000+ purchase price. BTW: are you thinking of house hacking? A live in 2-4 plex is always a great way to go for your first property! Get others to pay for most or all of your PITI. Really wish I did that 25 years ago. I believe your closing costs are probably close, but it could be different on where you purchase. Again, you can always ask sellers to contribute to closing costs. Around here, $2,000 is standard. Doesn't mean they'll agree, but asking is always free.

closing costs will vary based on several factors .....the location of the transaction / the interest rate desired / credit score / ltv … to get in touch with someone familiar with the are you are considering ...get pre approved so that you can understand the numbers better and also be assured you can qualify for what you want …...also - avoid the FHA loan and use a conventional loan if all at possible due to the fact the mortgage insurance on a FHA loan is permanent and cant be eliminated unless you sell/ payoff the loan or refinance at a later date

@Diana Bakema A lot of this depends on your taxes and insurance costs. My average closes costs (these are all 20 percent down Conventional) is 4200 in TN and OH. At this point I’m usually within a hundred bucks of my estimate vs actual For closing costs

Hi Anthony -

i have to wait for the 2 years tax papers in order to go to the bank, that's why i just can't buy anything until next year around this time. But in the meantime i will be for sure checking on my credit report (i heard that i can do this once a year without hurting my credit, wright?)

I am sorry for not been more precise.... i am looking into a house of $295,000 as a primary residence as after some evaluation i saw i will be better off buying it then keep paying rent were i currently live now.

So this is how it would look like

Price sale: $295,000

Down payment anyway between $20,000 and $30,000 

30 years fixed at 4.36%

Mortgage payment between $1,753 and $1,703 

Closing costs around $7,000 (average for FL i think)

Appraisal around $450 (again, i think the average)

Now, the rent amount i pay at the moment is $1,800 p/m

As i am not that long in the US i didn't had the time to save a lot more then the total of the amount described above. But i am making sure i also have 3 months of mortgage a side and something for repairs.

I thought about using the FHA because then i could lower my down payment and/or have a better interest rate. I am planning to pay off the house back as fast as i can maybe with a HELOC.

What are your thoughts?

I am missing a lot?

Hi Dave!

Welcome and thank you for participating!

I think i can get a conventional loan due to my credit score (720/730), but not as i only can afford $30,000 max! on down payment. :-(

I am planning to pay off earlier yes... 

Originally posted by @Robert M Parsons :
@Russell Brazil why is this? Is it not a good route to take?

FHA is a last resort loan for those with bad credit. The homeready loan allows for a lower down payment at 3%, lower PMI, and lower fees. The only reason to use FHA is if you have bad credit, or are buying a multifamily. FHA is the only low down payment option for multis.

Russel, i am sorry for my lack of knowledge!

I just found this out....

"If you take out a conventional mortgage and have a down payment of less than 20% -- in other words, if you're borrowing more than 80% of the value of the home -- then you'll have to pay private mortgage insurance (PMI). PMI protects the lender if you get foreclosed on, and it will cost you around 0.5% to 1% of the total mortgage value each year.

if you take out an FHA loan with a low down payment, you'll be required to pay a Mortgage Insurance Premium (MIP). This is similar to private mortgage insurance because it protects the lender in case of default. However, with an FHA loan, you need to pay a 1.75% premium up front, either by paying at closing or by rolling this cost into the loan and paying it off over time. You'll also need to pay annual premiums, typically for the entire life of the loan unless you refinance to a non-FHA loan. The annual premiums range from 0.45% to 1.05% depending upon the length of the loan and your down payment."

Your are totally wright! Thank you! :-)

It takes time to learn but i will get there....

@Diana Bakema one other thing to consider depending on which lender you go with, will be the amount of money you’re required to have in “reserves”. Some of the non conventional programs require larger amounts of reserves which can become a challenging surprise towards the end of your closing. That’s something you want to be sure you’re ahead of just In case. Hope this helps!

Hi Jonathan!
Thank you for your input!
What I have read so far is that I need reserve of a some of about 3 mortgage payments and some reserve for maintenance. Is that what you mean?