FHA Loan Down Payment Requirements Explained — Duane Buziak, Glen Allen's Mortgage Broker of the Year

Duane Buziak

Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage LLC

Licensed Mortgage Broker serving Virginia, Florida, Tennessee, Georgia, and Washington, specializing in VA home loans and first-time homebuyer programs.

Picture this: a young couple falls in love with a home in Twin Hickory, runs the numbers assuming they need 20% down, and quietly closes the browser tab. They figure homeownership is still years away. What they didn’t know is that FHA financing could have put them in that home with as little as 3.5% down — a difference of tens of thousands of dollars and potentially years of their lives.

That scenario plays out more often than you’d think across Glen Allen, Wyndham, and the Short Pump corridor. And it’s exactly why Duane Buziak, NMLS #1110647, spends so much time walking buyers through the actual mechanics of FHA down payment requirements before they make any assumptions about what they can or can’t afford.

This article is your complete guide to how FHA down payments actually work in the Glen Allen and Henrico County market. We’ll cover the two-tier credit score structure that determines whether you’re at 3.5% or 10%, how current home prices in the Innsbrook and Twin Hickory area interact with Henrico County’s FHA loan limits, where your down payment money can legally come from, and how Duane Buziak’s NoTouch Credit Pull lets you explore your eligibility without a single hard inquiry hitting your credit report.

By the time you finish reading, you’ll know exactly where you stand — and what your next step looks like.

Written by Duane Buziak, NMLS #1110647 | Glen Allen Mortgage Broker of the Year 2025 | Coast2Coast Mortgage LLC, NMLS #376205 | 3302 Haydenpark Lane, Henrico VA 23233 | 804-212-8663

The Two Numbers That Control Your FHA Down Payment

FHA financing is built around a simple but consequential credit score threshold. According to the HUD FHA Single Family Housing Policy Handbook 4000.1, the rule breaks down like this: borrowers with a FICO score of 580 or higher qualify for the minimum 3.5% down payment. Borrowers with scores between 500 and 579 are still eligible for FHA financing, but they must put down at least 10%. Below 500, FHA financing is not available at all.

HUD draws that line at 580 because the data shows a meaningful shift in default risk at that threshold. It isn’t arbitrary — it reflects decades of loan performance data. For Henrico County buyers, this distinction is enormously practical: on a $385,000 home, the difference between 3.5% and 10% down is roughly $25,000 in cash at closing.

Here’s the nuance most buyers miss, though. Those are HUD’s floor requirements — not necessarily the final word on what any specific broker or lender will accept. Individual lenders can layer their own “overlays” on top of FHA minimums. An overlay is an internal guideline that’s stricter than what FHA requires. One lender might require a 620 FICO even though FHA technically allows 580. Another might go down to 580 without hesitation. When Duane Buziak shops your file through Coast2Coast Mortgage LLC’s broker platform, he’s comparing overlays across hundreds of lenders simultaneously — which means finding the one whose guidelines actually fit your profile, not just the one with the flashiest billboard on West Broad Village.

This brings up another important distinction: the credit score used in a soft credit pull mortgage inquiry is not the same score a mortgage underwriter will see at closing. Duane Buziak’s NoTouch Credit Pull uses Vantage Score 4.0, which gives you a directionally accurate picture of your credit standing without triggering a hard inquiry. Mortgage underwriters, however, use a tri-merge FICO pull — specifically FICO models 2, 4, and 5 from the three major bureaus — and they typically use the middle score of the three.

The CFPB has published guidance on how different credit score models are used in mortgage lending, and the takeaway for buyers is this: your Vantage Score 4.0 read and your tri-merge FICO can differ, sometimes by a meaningful amount. Getting the NoTouch read first gives you a working baseline for planning — and it protects your score while you’re still comparing options. A no hard inquiry mortgage pre approval process means your credit isn’t dinged every time you want to explore what’s available.

The bottom line: know your tier, understand that overlays exist, and get a soft-pull read before you do anything else. That sequence of steps costs you nothing and tells you everything you need to plan your next move.

What Glen Allen Home Prices Mean for Your Actual Dollar Amount

FHA loans have a ceiling — a maximum loan amount HUD sets by county. For 2026, buyers in Henrico County (which includes Glen Allen, Short Pump, Twin Hickory, Wyndham, Innsbrook, and West Broad Village) should verify the current FHA loan limit directly at HUD’s mortgage limits page, as limits are updated annually. The 2026 national FHA floor for single-family homes was set at a level that covers the vast majority of purchase scenarios in the Glen Allen market — but buyers targeting higher price points near the top of the Short Pump corridor should confirm their specific purchase price falls within the limit before assuming FHA is available.

Let’s run the real math on a realistic Glen Allen scenario. Assume a home priced at $385,000 in the Innsbrook area — a reasonable illustrative figure for the market, not a guaranteed median.

3.5% Down Scenario (580+ FICO): Down payment = $13,475. Base loan amount = $371,525. Upfront MIP at 1.75% of the base loan = approximately $6,502, which is typically financed into the loan rather than paid out of pocket at closing. Annual MIP is assessed on the remaining loan balance and varies based on your loan term and LTV — confirm current annual MIP rates at HUD.gov since rates can be updated by mortgagee letter.

10% Down Scenario (500–579 FICO): Down payment = $38,500. Base loan amount = $346,500. Upfront MIP at 1.75% = approximately $6,064, financed into the loan. Annual MIP applies here as well, but with a critical difference in duration.

That duration difference is one of the most underappreciated nuances in FHA financing. Buyers who put down less than 10% pay annual MIP for the life of the loan — it doesn’t automatically cancel the way PMI does on conventional loans once you reach 80% LTV. Buyers who put down 10% or more have annual MIP that cancels after 11 years. Over a 30-year loan, that’s a meaningful difference in total cost, and it’s one of the reasons some buyers in Twin Hickory and Wyndham choose to stretch for the 10% threshold even when they qualify for 3.5% — or use the 3.5% FHA entry point now with a plan to refinance into a conventional loan once they’ve built equity.

Understanding your loan-to-value ratio at origination also matters for your overall payment picture. The higher your LTV, the longer MIP stays on the loan. Duane Buziak walks every buyer through a side-by-side comparison of total cost scenarios — not just the down payment number — so there are no surprises at the closing table.

Where the Down Payment Money Can Actually Come From

One of the most liberating facts about FHA financing is that your down payment doesn’t have to come entirely from your own savings. According to the HUD Handbook 4000.1, 100% of your FHA down payment can come from a gift — provided it comes from an eligible donor and is properly documented.

Eligible donors under FHA rules include family members, employers, labor unions, charitable organizations, and government entities. What’s not allowed is a gift from someone with an interest in the transaction — the seller, the real estate agent, or the builder cannot gift you the down payment. The documentation requirements are specific: you’ll need a signed gift letter confirming the funds are a gift and not a loan (no repayment expected), along with evidence of the transfer — typically bank statements showing the withdrawal from the donor and the deposit into your account.

Beyond gifts, Henrico County and Glen Allen buyers have access to down payment assistance programs worth exploring. Virginia Housing offers DPA options for eligible buyers that can be layered with FHA financing. Duane Buziak also shops Dynamo and Turbo DPA programs through Coast2Coast Mortgage LLC’s broker platform — options that many single-channel lenders simply don’t have access to. These programs can meaningfully reduce the cash you need to bring to closing, though it’s important to understand that assistance programs have their own eligibility requirements, income limits, and terms. Duane will walk you through what’s currently available and what you’d qualify for based on your specific file — without making promises that don’t match the fine print.

One more tool that often surprises buyers: seller concessions. Under FHA guidelines, a seller can contribute up to 6% of the purchase price toward the buyer’s closing costs. On a $385,000 home, that’s up to $23,100 the seller could contribute toward your lender fees, title costs, prepaid items, and escrow setup. This is distinct from the down payment — sellers cannot pay your down payment under FHA rules, full stop — but reducing your closing costs through seller concessions directly lowers the total cash you need at the table. In a market where Glen Allen sellers are sometimes open to negotiation, this is a lever worth pulling in your purchase contract.

The combination of gift funds, DPA programs, and seller concessions means that a buyer’s actual out-of-pocket requirement can look very different from the headline down payment figure. Getting the full picture requires a broker who knows all three levers — not just the one a single lender happens to offer.

Broker vs. Direct Lender: How Your Down Payment Options Differ

Not all mortgage sources are created equal when it comes to FHA down payment flexibility. Here’s a direct comparison of what buyers in Glen Allen and Henrico County can expect from different channels:

Duane Buziak / Glen Allen Mortgage (Coast2Coast Mortgage LLC, NMLS #376205)

Courtney Ficken / First Home Mortgage

Rocket

Movement Mortgage

The table below compares key factors across these options:

The core advantage of working with a broker like Duane Buziak is access to multiple lender overlays at once. When you apply through a single lender, you get that lender’s guidelines — period. If their overlay requires a 620 FICO and you’re at 595, you’re declined. When Duane shops your file across hundreds of lenders, he’s finding the one whose specific FHA overlay fits your profile. That’s the difference between a declined application and a closed loan.

The NoTouch Credit Pull is particularly valuable for buyers who are still building toward the 580 threshold. A mortgage pre approval without hard pull means you can get a realistic picture of where you stand, what rate environment you’re shopping in, and what you’d need to do to close the gap — all without a hard inquiry appearing on your credit report and potentially lowering the score you’re trying to protect.

For Glen Allen buyers who’ve been told “not yet” by a single-channel lender, a broker conversation is often the step that changes the answer.

Common FHA Down Payment Mistakes Glen Allen Buyers Make

Even well-prepared buyers can stumble on mechanics that aren’t intuitive. Here are the mistakes Duane Buziak sees most often among Henrico County buyers navigating FHA financing.

Confusing Earnest Money with the Down Payment: Earnest money is the good-faith deposit you put down when your offer is accepted — typically 1–2% of the purchase price in the Glen Allen market. It demonstrates you’re serious. At closing, it typically credits toward your total cash to close. But it is not the same as your FHA-required down payment. Buyers who mentally treat their earnest money deposit as “the down payment done” can find themselves scrambling when they realize the full down payment amount is still owed at closing, minus whatever earnest money applies.

Moving Large Sums Without Documentation: FHA requires that all funds used for your down payment be “sourced and seasoned.” Sourced means you can document where the money came from. Seasoned means it’s been sitting in your account long enough to be traceable — typically the last 60 days of bank statements are reviewed. If you move a large sum of cash into your account in the weeks before closing without a clear paper trail, an underwriter can flag it and potentially pause or deny your approval — even if the money is legitimately yours. The fix is simple: move money early, document everything, and talk to Duane before you make any large transfers.

Waiting for 20% When 3.5% Would Have Worked: This is the most expensive mistake, and it’s the one that hits Twin Hickory and Wyndham buyers hardest. Home values in the Glen Allen corridor have appreciated meaningfully over the past several years. A buyer who decided to wait until they’d saved a full 20% may have found that the target home’s price rose faster than their savings rate. FHA’s 3.5% down payment exists precisely to help creditworthy buyers stop renting and start building equity. The math on waiting rarely works out the way buyers expect — and the equity you’d have built during the waiting period is gone forever.

The common thread in all three mistakes is the same: assumptions that haven’t been tested against the actual rules. A single conversation with Duane Buziak can clear up all three before they cost you a contract or a year of your life.

8 Questions Glen Allen Buyers Ask About FHA Down Payments

What is the minimum FHA down payment in Glen Allen, VA in 2026?

The minimum FHA down payment is 3.5% of the purchase price for borrowers with a FICO score of 580 or higher, as established by the HUD Handbook 4000.1. Borrowers with scores between 500 and 579 must put down at least 10%. Scores below 500 are not eligible for FHA financing.

Can gift funds cover 100% of my FHA down payment?

Yes. FHA allows 100% of the down payment to come from a gift, provided the donor is eligible — family members, employers, labor unions, charitable organizations, and government entities all qualify. The gift must be documented with a signed gift letter stating no repayment is required, plus evidence of the transfer. The seller cannot gift the down payment.

How does FHA MIP differ from conventional PMI?

FHA mortgage insurance premium (MIP) includes two components: an upfront MIP of 1.75% of the base loan amount (typically financed into the loan) and an annual MIP paid monthly. Unlike conventional PMI, FHA MIP for borrowers who put down less than 10% stays on the loan for its entire life — it doesn’t automatically cancel at 80% LTV. Borrowers who put down 10% or more have MIP that cancels after 11 years.

Can the seller pay my FHA down payment?

No. Under FHA rules, the seller cannot contribute to the buyer’s down payment under any circumstances. Sellers can contribute up to 6% of the purchase price toward the buyer’s closing costs, but the down payment itself must come from the buyer, a gift from an eligible donor, or an approved assistance program.

Can I stack down payment assistance with an FHA loan in Henrico County?

Yes, in many cases. Virginia Housing DPA programs and other assistance options Duane Buziak accesses through Coast2Coast Mortgage LLC’s broker platform can be layered with FHA financing, subject to program eligibility requirements. Each program has its own income limits, purchase price caps, and terms — a broker conversation will confirm what’s stackable for your specific file.

What happens if my credit score drops between pre-approval and closing?

If your score drops below the 580 threshold after pre-approval, you could lose eligibility for the 3.5% down payment tier and be required to bring 10% instead — or potentially lose FHA eligibility entirely if it falls below 500. This is why Duane Buziak advises buyers not to open new credit accounts, miss payments, or take on new debt between pre-approval and closing. Your file is typically re-verified before funding.

How does the NoTouch Credit Pull work for FHA pre-approval?

Duane Buziak’s NoTouch Credit Pull uses Vantage Score 4.0 to give you a directional read on your credit standing without triggering a hard inquiry on your credit report. This no hard inquiry mortgage pre approval process lets you explore rate options and eligibility across lenders before committing to a full application. Note that mortgage underwriters use tri-merge FICO (models 2, 4, and 5), so your Vantage Score 4.0 read and your underwriting score may differ — Duane will walk you through both.

How does FHA compare to conventional financing on down payment for a $385,000 home in Glen Allen?

On a $385,000 purchase, FHA requires $13,475 down at 3.5% (for 580+ FICO). A conventional loan with a 5% down payment would require $19,250, and a 3% conventional down (for qualifying first-time buyers) would require $11,550. Conventional loans don’t carry upfront MIP, but private mortgage insurance applies until you reach 80% LTV. The right choice depends on your credit score, how long you plan to stay in the home, and whether you qualify for conventional overlays — Duane runs both scenarios side by side for every buyer.

Your Path to the Closing Table Starts Here

FHA’s 3.5% down payment isn’t a loophole or a consolation prize — it’s a well-established pathway that has helped generations of buyers in Glen Allen, Short Pump, and across Henrico County stop renting and start building real equity. The mechanics are straightforward once you understand the two credit tiers, how local home prices interact with your actual dollar requirement, and how funding sources like gift funds, DPA programs, and seller concessions can reduce your cash-to-close figure.

The buyers who succeed are the ones who get accurate information early — before they make assumptions about what they can’t afford, and before they wait another year saving toward a 20% threshold they may never need.

The best first step is one that costs you nothing and risks nothing: a NoTouch Credit Pull with Duane Buziak. You’ll get a Vantage Score 4.0 read, a rate comparison across hundreds of lenders, and a clear picture of which FHA down payment tier applies to your file — all without a hard inquiry touching your credit report. That’s a mortgage pre approval without hard pull that actually tells you something useful.

Ready to find out exactly where you stand? Get your free mortgage consultation today at GlenAllenMortgage.com or call Duane Buziak directly at 804-212-8663. The families of Twin Hickory, Wyndham, and Innsbrook who’ve already closed with Duane know: the process doesn’t have to be stressful, and it doesn’t have to start with a credit hit.