Low Down Payment Options

You do not need a large sum of cash to buy a house. Figuring out how much to put down can be confusing, but the right path depends entirely on your specific financial situation and goals.

Your Low Down Payment Options:

• FHA Loans: Buy a single-family home or condo with as little as 3.5% down. The tradeoff is that you will need to pay mortgage insurance.
• USDA Loans: Looking for a home out in the country? Buyers in eligible rural and suburban areas can qualify for a USDA loan with zero money down (income limits apply).
• VA Loans: Qualifying military veterans and active-duty service members can purchase a home with 100% financing and absolutely no down payment.
• 80/20 Non-Conforming Loans: Some programs let you take out a second mortgage to cover the traditional 20% down payment, keeping your out-of-pocket costs low.

The Cost vs. Benefit of Putting Less Down

If you put down less than 20% on a conventional loan, you will typically face slightly higher interest rates and be required to pay Private Mortgage Insurance (PMI). However, PMI isn’t forever. Once your home reaches 20% equity, you can usually refinance it away.

Why put less down?

• Keep your cash: You keep more money in your pocket for emergencies, renovations, or furnishings.
• Opportunity cost: You can invest the cash you saved on the down payment somewhere else for a potentially higher return.
• Same appreciation: Your home grows in value at the exact same rate whether you put down 3% or 20%.

Your lender will tell you what you qualify for, but you are the only one who can decide what monthly payment you are comfortable with. Let’s talk about what makes the most sense for your budget.