FHA loans require 3.5% down with a credit score of 580 or higher, or 10% down with a score between 500 and 579. That is the HUD minimum, and it is the starting point for the real cash number, not the finish. On a $275,000 home in Augusta or Rockingham County, 3.5% is $9,625 before closing costs, prepaid items and the appraisal.
This guide is written by Duane Buziak, NMLS #1110647, a Virginia mortgage broker who works with buyers from Winchester to Staunton. It covers how the score tiers work, where the down payment can legally come from, a full dollar comparison of FHA and USDA zero down on the same Augusta County home, and how FHA stacks up against VA and conventional financing.
The 3.5% Rule and Credit Score Tiers: FHA Down Payment Minimums in Augusta and Rockingham Counties
Start with a price. Home values in Staunton, Waynesboro and Harrisonburg differ enough that the 3.5% figure moves by thousands of dollars from one city to the next. The U.S. Census Bureau publishes a median owner-occupied home value for each locality, which you can pull from its Staunton QuickFacts page and compare against Waynesboro and Harrisonburg. For the examples in this article, a $275,000 purchase price is used as an illustration that sits in the range Valley buyers commonly shop. At that price, 3.5% down is $9,625.
Under HUD Handbook 4000.1, the minimum required investment depends on the score:
- 580 or higher: 3.5% down, which means financing up to 96.5% of the value.
- 500 to 579: 10% down, which is $27,500 on a $275,000 home.
A HUD minimum is not the same as what a given company will approve. Many companies add overlays, which are their own score floors above HUD’s. One may want 620 or 640, while another follows the HUD floor. This is why shelf width matters: a 560 score can be a dead end at one company and a workable file at another. Duane Buziak, as a broker with access to 500+ wholesale lenders, can shop a file across many sets of guidelines instead of one.
Terms you will see on your estimate
- Base loan amount: the purchase price minus your down payment.
- UFMIP: the upfront mortgage insurance premium, 1.75% of the base loan as of the current HUD rules, usually financed into the loan.
- Annual MIP: the mortgage insurance premium charged yearly and collected monthly. The rate depends on loan size, term and LTV.
- LTV: loan-to-value, the loan balance divided by the home’s value. A 3.5% down payment means a 96.5% LTV.
The common misconception is that 3.5% is the total cash required. It is only the down payment. Closing costs, prepaid taxes and insurance, and the appraisal fee are separate. To see where your score falls before anything touches your credit file, Duane Buziak offers the NoTouch Credit Pull, which avoids a hard inquiry up front.
Where the FHA Down Payment Can Come From: Gifts, Savings and Virginia Housing Assistance
HUD allows several sources for the minimum required investment:
- Your own savings, checking or retirement-account withdrawals, documented with statements.
- Gift funds from a relative, or from another donor HUD accepts, such as an employer or a charitable organization. A gift letter stating that no repayment is expected is required, and the transfer needs a paper trail from the donor’s account to yours or to the closing agent.
- Employer assistance programs.
- Approved down payment assistance (DPA) from a government or nonprofit source.
Virginia Housing runs DPA programs that buyers sometimes pair with FHA loans. Terms, income limits, price limits and funding availability change, so confirm current details on the Virginia Housing homebuyer page before you plan around any of them. As of this writing, treat any figure you read secondhand as unconfirmed until you see it there.
What seller concessions can and cannot do
Seller concessions cannot be used for your minimum required investment. They can cover closing costs and prepaids, and HUD has long capped them at 6% of the sales price (verify the current cap in Handbook 4000.1 when you write an offer). On a $275,000 home, 6% is $16,500 of possible help with costs, not with the down payment.
This is the basis of a no-out-of-pocket closing options strategy: negotiated seller concessions, and in some cases lender credits, are structured to cover closing costs so you bring only the down payment. The approach depends on the contract, the appraisal and the rate you choose. It is not a promise that closing costs vanish.
The 60-day documentation mistake
The most common file problem is a large cash deposit with no source. Underwriters review recent bank statements, and a deposit that is not a normal paycheck must be explained. If a parent hands you $8,000 in cash and you drop it in your account the week before applying, expect a request for proof of where it came from. Move gift money by traceable transfer, keep the gift letter, and avoid cash deposits during the two months before you apply.
Worked Example: $275,000 Home in Augusta County, FHA vs. USDA Zero Down
The numbers below are hypothetical. They use an illustrative 6.25% fixed rate on a 30-year term for both loans, and they are not a rate quote. Monthly figures cover principal, interest and mortgage insurance only, not taxes or homeowners insurance.
FHA with 3.5% down
- Price: $275,000. Down payment at 3.5%: $9,625.
- Base loan: $265,375.
- UFMIP at 1.75%: $4,644.06, financed. Total loan: $270,019.06.
- Principal and interest at 6.25%: about $1,663 per month.
- Annual MIP: the rate is 0.55% as of the most recent HUD mortgagee letter for a 30-year loan at this loan size and an LTV above 95%. The formula is base loan x rate / 12, so $265,375 x 0.0055 / 12 is about $122 per month in year one, falling slightly as the balance declines.
- Estimated payment: about $1,785.
USDA with zero down
- Price: $275,000. Down payment: $0.
- Upfront guarantee fee at 1%: $2,750, financed. Total loan: $277,750.
- Principal and interest at 6.25%: about $1,710 per month.
- Annual fee at 0.35% of the balance: $277,750 x 0.0035 / 12 is about $81 per month.
- Estimated payment: about $1,791.
USDA fee levels are set by USDA Rural Development, so verify the current figures on its guaranteed loan program page.
The side-by-side: FHA needs $9,625 for the down payment, and USDA needs $0. Total loans are about $270,019 and $277,750. The monthly difference is roughly $6, with FHA slightly lower in this setup because the lower MIP does not fully offset the larger balance on USDA. In practice the rates on the two loans can differ, which can shift the comparison either way.
So USDA wins on cash by nearly $10,000, and the monthly cost is essentially a tie at equal rates. That makes USDA the stronger option when the property sits in an eligible area and household income is within the county limit. FHA is the fallback when the address or the income does not qualify.
FHA vs. USDA, VA and Conventional: Which Down Payment Minimum Fits Which Buyer
USDA comes first in the Valley. It requires 0% down, but the property must sit in an eligible area and the household must be within the county income limit. Check the address on the USDA eligibility map. Eligibility varies inside Rockingham, Augusta, Shenandoah, Warren, Page and Frederick counties, and income limits differ by county and household size, so pull the current limit for your county and family size from USDA instead of relying on a number you read elsewhere.
VA comes second. Eligible veterans and service members can buy with 0% down. The funding fee is waived for veterans receiving compensation for a service-connected disability, as described on VA.gov. A veteran who qualifies for VA rarely has a reason to choose FHA.
Conventional can beat FHA at higher scores. Some first-time buyer programs allow as little as 3% down. Private mortgage insurance on a conventional loan can be removed once equity builds, whereas FHA MIP on a loan with under 10% down generally lasts for the life of the loan. With a score in the high 600s or better and stable debt levels, conventional often costs less each month.
A quick guide by situation
- Score under 640: FHA is often the strongest fit, and USDA also works if the property qualifies.
- High debt-to-income ratio: FHA tends to be more flexible than conventional.
- Rural property in an eligible area: check USDA first.
- Veteran or service member: check VA first.
- Score of 700 or more with savings: compare conventional against FHA.
Duane Buziak places buyers across all of these programs as a broker, so the loan is chosen for your file instead of fitted to the one product a single company sells.
Comparison Table: Duane Buziak’s Broker Access vs. Rocket, Movement and Alcova
Duane Buziak, NMLS #1110647, closed $95.6M in production as a solo originator, holds 1,400+ five-star reviews, ranks in the Top 1% Nationwide, and appeared in the Scotsman Guide Top Originator list for 2025 and 2026. The structural point matters more for an FHA buyer with a borderline score: a broker submits to hundreds of wholesale lenders, while a single company works from its own guidelines and rate sheet. The competitor descriptions below are general and drawn from how each company presents itself, so confirm current program details directly with each provider.
| Provider | Model | FHA score flexibility and program range | Pre-approval credit pull |
|---|---|---|---|
| Duane Buziak, Blue Mountain Mortgages | Mortgage broker with access to 500+ wholesale lenders | Files can be matched to lenders with different FHA score guidelines; FHA, USDA, VA, conventional, jumbo and investment loans | NoTouch Credit Pull, no hard inquiry up front |
| Rocket | National retail company | Offers FHA and other programs under its own guidelines; confirm current score requirements with Rocket | Confirm with Rocket |
| Movement | National retail company with local branches | Offers FHA and other programs under its own guidelines; confirm current score requirements with Movement | Confirm with Movement |
| Alcova | Virginia-based retail company | Offers FHA and other programs under its own guidelines; confirm current score requirements with Alcova | Confirm with Alcova |
The practical difference is that a score near 580 or an unusual income file is one place where shopping many lenders pays off. With the NoTouch Credit Pull, you can see where you stand before a hard inquiry is placed.
FHA Down Payment FAQ for Valley Buyers
Rates, limits and program rules below are as of this writing and can change, so verify against HUD, USDA and Virginia Housing before you act.
Can I buy in Harrisonburg with 3.5% down?
Yes, if your score is 580 or higher and the home meets FHA appraisal standards. At a $285,000 price, 3.5% is $9,975, plus closing costs and prepaids.
Does Waynesboro qualify for USDA instead of FHA in 2026?
Some addresses in and around Waynesboro may be eligible, but eligibility is address-specific and USDA updates its maps. Enter the exact property on the USDA eligibility map before you decide.
How much do I need down on a $275,000 home in Augusta County?
FHA at 3.5% needs $9,625 for the down payment. Closing costs and prepaids are additional, and a score of 500 to 579 would require 10%, or $27,500.
Can gift money cover my FHA down payment in Winchester?
Yes, from an acceptable donor with a signed gift letter and a documented transfer. Avoid depositing cash, because underwriters will ask for its source.
Is a 580 score enough in Rockingham County?
580 meets the HUD minimum for 3.5% down. Some companies add overlays above that, so the answer depends on who reviews the file.
Does Front Royal (Warren County) have USDA-eligible areas?
Parts of Warren County outside the town center may be eligible, but it depends on the address. Check the specific property on the USDA map and confirm your household income against the current Warren County limit.
Can I use Virginia Housing assistance with an FHA loan in Frederick County?
Virginia Housing offers programs that can be paired with FHA financing, subject to income limits, price limits and funding availability. Confirm current terms on the Virginia Housing site before making an offer.
How long does FHA MIP last with 3.5% down?
For loans with an LTV above 90% at origination, MIP lasts for the life of the loan, based on current HUD rules. With 10% or more down, it can end after 11 years. Refinancing into a conventional loan is the usual way to drop it sooner.
Why the 3.5% FHA Minimum Is a Floor, Not a Plan
The 3.5% minimum tells you the least HUD will accept. The right program depends on your score, household income and where the property sits. A buyer in an eligible part of Page or Shenandoah County may do better with USDA at $0 down, a veteran with VA entitlement can skip the down payment entirely, and a buyer with a strong score may find conventional cheaper over time.
Ready to turn your Blue Ridge homeownership dreams into reality? Contact our local mortgage experts today to explore personalized loan solutions tailored to your unique financial situation. Whether you’re a first-time buyer or looking to refinance, we’ll guide you through every step with the competitive rates and trusted service our Virginia community relies on. Start with a NoTouch Credit Pull through Blue Mountain Mortgages by Duane Buziak and see your options before a hard inquiry is made.