How to Finance Closing Costs on an FHA Mortgage

Work with a mortgage broker to roll closing costs into your FHA loan.

Work with a mortgage broker to roll closing costs into your FHA loan.

The Federal Housing Administration is a government agency that offers special mortgages, known as FHA mortgages, that require a smaller down payment than conventional home loans require. The FHA requires 3.5 percent down on a home loan, but, like traditional mortgages, FHA mortgages come with closing costs. For the cash-strapped home buyer, coming up with closing costs can be challenging.

Assess how much closing costs will be and whether you can figure out ways to keep these fees down. Closing costs cover a multitude of expenses, from appraisal and inspection fees to title insurance costs and attorney's fees. Many of these elements can vary. For example, one home inspector may charge slightly lower rates than a competing home inspector. Verify that all costs are accurate before paying.

Meet with a mortgage broker to discuss your financing options, including rolling your closing costs into your FHA loan. Financing options available to you may depend on your credit history, income level, employment history and other factors. A low income, for example, can negatively impact your eligibility to roll your closing costs into your FHA mortgage. A mortgage broker will be able to evaluate such elements as your credit history and salary and let you know whether you're eligible to roll your closing costs into the price of your property purchase. According to, the government only "allows closing costs to be included in the loan as long as the borrower qualifies for the higher amount."

Contact banks and other lending institutions if FHA denies you financing help on your closings costs. Another lender, such as a national bank or local credit union, may offer you a small line of credit that you can use to pay your closing costs. Most lenders will typically run background checks on your credit history and employment prior to granting or denying you a loan. Some lenders may also inquire as to the purpose of the credit you are applying for.

Reach out to friends and family members who may allow you to borrow money to pay your closing costs. Offer to pay any borrowed money back by a certain monthly deadline with interest to encourage those close to you to help you out.


  • Rolling your closing costs into your FHA mortgage may save you the hassle of coming up with closing fees during escrow, but the convenience comes at a price. Your monthly mortgage payment will be higher since those closing charges will be added to your mortgage, along with incurred interest on the total.

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About the Author

Crystal Vogt has been an editor and freelance writer since 2005 and has had her work mentioned on MediaBistro, Yahoo! Finance and MSN Money, among other outlets. She received her M.S. in journalism from Boston University and holds a B.A. in English from UC Santa Barbara.

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