You Don’t Need 20 Percent Down to Buy Your Next Home.
Find a homeownership program. The majority of homeownership programs provide down payment and closing cost assistance, helping finance some or all of your costs. There are nearly 2,300 homeownership programs available across the country, including grants, forgivable loans, below-market first mortgages, tax credits and more.
The average down payment program benefit across all programs is more than $7,500. Both the home and the homebuyer must qualify for the program so do your research early.
Use a low down payment mortgage. There are several options for buyers today. Keep in mind that you can layer down payment programs with these loans.
- FHA loan: Popular with first-time homebuyers, it allows a 3.5% down payment minimum.
- VA loan: If you are a veteran or member of the U.S. military, look into a VA loan which offers 0% down.
- USDA loan: Eligible in rural and suburban areas, it offers 0% down.
- Freddie Mac’s low down payment loan allows down payments of 3 to 5% and flexible sources of funds for down payments.
- Fannie Mae’s new loan program that allows a 3% minimum down payment. It’s great for multigenerational households because it allows the income of everyone in the home to be used to qualify for the home loan.
- Conventional loan with private mortgage insurance: Allows 3% down payment minimum. PMI will be required if you put down less than 20%. However, both upfront and ongoing PMI costs are lower with conventional financing than other options, and you can get rid of PMI once you’ve accrued over 20% equity in your home down the road.