Down Payment - How Much Do You Need?

Gone are the days when anyone could buy a home with just a promise and a signature. No documentation loans allowed virtually anyone to buy a house with no money down and just a simple credit check. After the mortgage meltdown, this all changed. Lenders tightened guidelines and down payments were back.

But how much do you actually need? Must you always find 20% down? The answer might surprise you. There are many ways to buy a home with less than 20% down payment.

0% Down

There are still two loan programs which allow one to buy a home for no down payment; the VA loan and the USDA loan. The VA loan requires the borrower to be a qualified service person or veteran, and the USDA loan is for certain areas under the Department of Agriculture.

5% Down

Conventional loans with loan limits can allow one to buy a home with as little as 5% down. These loans do have Private Mortgage Insurance (PMI) which can be eliminated when the loan amount falls below the 20% threshold.

3.5% Down

FHA offers first time home buyers a good home loan for only 3.5% down payment. Again, these loans have loan limits and PMI, but they offer a faster entry into the housing market.

Buying a home doesn’t always mean a 20% loan. If you’re considering buying a new home, talk to one of our ProVisors about your options.