Cairo's Criminal Court also sentenced his sons, Alaa and Gamal, to four years each for the same charges.
"The court orders Mohamed Hosni Mubarak to be sent to jail for three years," said the judge as Mubarak looked on from a cage flanked by his sons, Reuters reported on Wednesday.
Mubarak, who faces a number of trial cases, including a retrial over the killing of protesters in the 2011 uprising, is currently residing in a military hospital in Cairo's upscale neighborhood of Maadi.
The three accused, a long with other defendants, were found guilty of embezzeling an estimated $17.6m, that were meant to renovate presidential palaces, but were instead spent on upgrading the family's private properties.
The three were also fined $2.9mln and ordered to reimburse the embezzeled amount to the state treasury.
In June 2012, Mubarak was sentenced to life in prison for involvement in the deaths of hundreds of people during the 18-day protests, but has challenged the verdict.