A $350,000 Richmond FHA purchase with 3.5% down means $12,250 down and a base loan of $337,750. Add FHA’s 1.75% upfront mortgage insurance premium of $5,910, and the financed balance becomes about $343,660. If one pricing option produces a $2,258 principal-and-interest payment at 6.875% versus $2,172 at 6.50%, the monthly difference is $86. Over five years, that is $5,160 before considering the different closing-cost structure. That is why I want buyers to look at real dollars, not just a rate headline.
A Richmond FHA purchase can be a smart lane for buyers who have steady income, limited cash for a down payment, or credit that does not yet fit conventional pricing comfortably. It is not automatically the cheapest mortgage. It is, however, a practical way to compete for a home in neighborhoods such as The Fan, Church Hill, and Scott’s Addition, while also keeping options open in Glen Allen, Midlothian, and Chesterfield.
By Duane Buziak, NMLS #1110647
Table of Contents
- Why FHA can fit a Richmond buyer
- Down payment, credit, and loan-limit math
- Richmond market conditions and offer strategy
- Your rate-and-cost break-even
- FHA compared with future refinance paths
- Eight Richmond FHA purchase questions
Why an FHA Purchase Can Work in Richmond
FHA financing allows a 3.5% minimum down payment with a 580 or higher qualifying credit score. Buyers with scores from 500 to 579 may qualify with 10% down, subject to manual review and the full file. Those are program thresholds, not promises. Income stability, debt-to-income ratio, payment history, assets, and property condition still matter.
For a $350,000 home, 3.5% down is $12,250. That is meaningfully less than the $17,500 needed for 5% down or $70,000 for 20% down. FHA also permits certain closing-cost contributions from the seller, within program limits. In a normal Richmond transaction, total buyer closing costs can commonly run about 2% to 4% of the purchase price before seller credits, depending on title work, prepaid taxes, insurance, escrows, and points.
The trade-off is mortgage insurance. FHA generally charges a 1.75% upfront premium that can be financed, plus annual mortgage insurance paid monthly. For many 30-year FHA loans above 90% loan-to-value, the annual charge is commonly 0.55% of the outstanding base loan amount. On a $337,750 base loan, that starts near $155 per month. That cost deserves respect, but it should be weighed against the opportunity to buy sooner and build equity rather than waiting years to save a larger down payment.
Richmond FHA Purchase Limits, Prices, and Competition
For 2026, the baseline conforming conventional loan limit is $832,750 for a one-unit property. FHA loan limits are set separately by county and should be confirmed before writing an offer because they can change annually. In the Richmond area, a typical FHA-priced home is usually well below the local FHA ceiling, but a higher-priced property in Short Pump or parts of Midlothian can require closer attention to the numbers.
As a local reference point, Redfin reported a median sale price around $390,000 in Henrico County during 2025. Values and monthly medians move, so treat that as market context rather than an appraisal. At that price, an FHA buyer using 3.5% down needs roughly $13,650 for the down payment, plus closing funds unless the contract includes seller concessions.
Richmond’s market is not one single market. A renovated home near Carytown can draw quick attention and stronger terms. In parts of Chesterfield and Hanover, buyers may find more choice, but clean homes that are correctly priced can still move fast. Inventory has improved from the tightest periods, yet buyers should not confuse more listings with weak competition. The best offer is often the one that is fully reviewed, realistic on appraisal, and clear about financing timelines.
A soft credit pull mortgage review helps early in that process. It lets me evaluate the major score factors and liabilities without immediately creating a hard inquiry. If you are searching for a no hard inquiry mortgage pre approval, understand the distinction: a soft review can support an informed prequalification, while a full underwriting file and final approval may later require a hard credit report. Honest expectations beat cute marketing every time.
Get the Numbers Before You Tour Homes
A mortgage pre approval without hard pull language can mean different things from different companies. Ask what information was actually reviewed. Did the broker verify income documents? Review assets? Run automated underwriting? Or was it simply a conversation based on what the buyer reported?
My preference is a no credit hit mortgage application at the early fact-finding stage, followed by deeper documentation before you remove contingencies. A soft pull mortgage broker can identify problems early, such as a high credit-card balance, an undisclosed auto payment, or a disputed account that needs time to resolve. That can protect both your score and your negotiating position.
For FHA, buyers should plan for more than the down payment. A sensible file may include funds for inspections, appraisal-related items, earnest money, reserves, and moving expenses. FHA itself does not impose a universal cash-reserve requirement on a standard one-unit purchase, but having one to two months of total housing payment left after closing can make your application stronger and your first year of ownership less stressful.
A Real FHA Rate-and-Cost Break-Even Example
Here is the math I would show a buyer rather than saying one option is “better” without context. Assume the $343,660 financed FHA balance from the opening example. Option A carries a 6.875% rate with $2,258 in monthly principal and interest. Option B carries a 6.50% rate with $2,172 in monthly principal and interest, but it costs $4,200 more at closing.
The monthly savings are $86. Divide $4,200 in additional costs by $86 in monthly savings:
$4,200 ÷ $86 = 48.8 months.
The break-even is about 49 months. If you expect to sell, refinance, or make a large principal reduction before four years have passed, Option A may be the more sensible choice. If you expect to hold the financing longer than that, Option B deserves serious consideration. FHA mortgage insurance, taxes, and homeowners insurance are separate from this principal-and-interest comparison.
For current rate context, Freddie Mac’s Primary Mortgage Market Survey is a useful weekly benchmark for conventional 30-year fixed mortgages. It is not an FHA quote and it does not include every borrower’s points, credit profile, or property factors. Your actual FHA pricing depends on the complete file, so ask for both the rate and the total cash-to-close figure on the same day.
FHA Today, Refinance Options Later
An FHA purchase does not permanently lock you into FHA financing. If your equity, income, and credit improve, a conventional rate-and-term refinance may eventually remove FHA mortgage insurance. If you later need to access equity, conventional cash-out is generally capped at 90% loan-to-value, while VA cash-out can reach 100% loan-to-value for eligible veterans under program rules. An IRRRL is only for an existing VA loan, so it does not apply to an FHA purchase.
| Feature | Rate-and-Term Refinance | Cash-Out Refinance | VA IRRRL |
|---|---|---|---|
| Primary purpose | Change rate, term, or mortgage insurance | Replace financing and access equity | Streamline an existing VA loan |
| Cash back | Limited incidental cash | Yes, subject to program limits | Generally limited incidental cash |
| Maximum loan-to-value | Program and occupancy dependent | 90% conventional; up to 100% VA for eligible borrowers | VA guidelines and net-tangible-benefit rules apply |
| Appraisal | Often required, though waivers may exist | Usually required | Often not required |
| Best fit | Improved terms or removing FHA insurance | Planned equity use with disciplined repayment | Eligible VA owners seeking a simpler VA refinance |
Richmond FHA Purchase FAQ
Can I buy a Richmond home with 3.5% down?
Yes. FHA generally permits 3.5% down with a 580 or higher qualifying score, provided the full application meets underwriting requirements.
Does FHA allow seller-paid closing costs?
Yes. Seller concessions may be allowed within FHA limits. Your contract, appraisal, and final cost worksheet determine what is usable.
Is a soft credit pull mortgage review a full approval?
No. It is an early credit review. Full approval requires documentation, underwriting, and typically a hard credit report later in the process.
Will FHA finance a condo in The Fan or Scott’s Addition?
Possibly. The condo project and unit must meet FHA eligibility requirements. Check this before making financing promises in an offer.
What credit score is best for FHA?
A 580 score supports the minimum 3.5% down structure, but stronger scores can provide more options and cleaner underwriting.
How much are FHA closing costs in Richmond?
A reasonable planning range is 2% to 4% of the purchase price before any seller credit, points, or prepaid adjustments.
Can TheRefiGuy help with FHA purchase financing?
Duane Buziak is a mortgage broker licensed in Virginia, Florida, Tennessee, Georgia, and DC. Purchase guidance is available within those licensed areas.
Should I choose FHA or conventional financing?
It depends on your credit profile, down payment, mortgage insurance cost, seller-credit needs, and how long you expect to keep the home.
A Clear Next Step
Do not let a 3.5% down payment make you skip the preparation work. Review the payment with taxes, insurance, and FHA mortgage insurance included. Get the property’s condition checked carefully. Then write an offer that gives the seller confidence without making promises your finances cannot support.
Legal disclaimer: Mortgage programs, rates, loan limits, fees, credit standards, mortgage insurance, and property requirements can change without notice. This article is general educational information, not a commitment to extend credit or financial advice. Qualification depends on a complete application, property review, underwriting, and applicable program guidelines. Duane Buziak is licensed to originate residential mortgage loans in Virginia, Florida, Tennessee, Georgia, and DC only. Ask about our no-out-of-pocket closing options where available.
Duane Buziak | Mortgage Maestro | NMLS #1110647 | Coast2Coast Mortgage, LLC NMLS #376205 | Licensed in VA, FL, TN, GA & DC [Contact] | NoTouch Credit Pull available — no hard inquiry, no credit hit.