The full explanation
That money cannot come from the seller, from anyone who benefits from the sale, or from anyone they reimburse. It is not everything you pay: your total required investment also includes the closing costs you pay.
An example
Marcos is buying with an FHA loan. The seller agrees to pay part of his closing costs, but his lender explains that the minimum investment has to come from his savings or another allowed source, not from the seller.
With real numbers
Computed with official data for the whole U.S. In your county the numbers may differ.
- Typical home value
- $332,700
- FHA minimum (3.5%)
- $11,645
- No PMI on a conventional loan (20%)
- $66,540
With the typical U.S. home value, $332,700, the minimum down payment on an FHA loan (3.5%) would be $11,645. Some conventional loans start at 3%: $9,981. For a conventional loan without private mortgage insurance (PMI), you would need $66,540 (20%).
Computed with: American Community Survey (ACS) 5-year estimates (2020–2024) · HUD Handbook 4000.1 (Update 18), II.A.2.a.iv — Minimum Required Investment (October 17, 2026) · Fannie Mae Selling Guide B5-6-01 — HomeReady Mortgage Loan and Borrower Eligibility (October 17, 2026) · Fannie Mae Selling Guide B7-1-01 — Provision of Mortgage Insurance (October 17, 2026)
You will see it in…
- HUD Handbook 4000.1, with the FHA loan rules
- The Closing Disclosure, in the money you put in (“Down Payment/Funds from Borrower”)
- The statements your lender asks for to document where the money comes from
