What is the minimum cash investment requirement for an FHA borrower?

The minimum cash investment requirement for an FHA borrower is that it excludes discount points and prepaid expenses. This means that when determining the amount of cash a borrower needs to invest upfront, only the down payment portion of the home's purchase price must be considered. FHA loans allow for a lower down payment compared to conventional loans, typically around 3.5% of the purchase price, so understanding what is included in this calculation is crucial for borrowers.

Discount points, which are fees paid to lower the interest rate on the mortgage, and prepaid expenses, such as property taxes and insurance premiums that are paid upfront, are not included in the cash investment requirement. This distinction helps borrowers to understand their actual upfront financial commitment and prepare accordingly.