That is such a big question when you are looking to purchase a home! Do I need a big down payment? The short answer is NO…and YES! What is your definition of BIG?!?!  Let’s break it down….

A down payment for a home loan is the future owners initial contribution to the purchase of a home.  There are many factors that determine your down payment including type of loan, loan qualification and the interest rate.  Let’s discuss each.

Type of Loan: 

FHA: The Federal Housing Administration insures the loan and has many benefits including a lower down payment, sometimes only 3.5%, low closing costs, and easy qualifying.  See the Housing and Urban Development for more information. (https://www.hud.gov/buying/loans)

VA Loans: The US Department of Veterans Affairs guarantee these loans and are for current and veteran military service members and spouses.  VA loans typically do not require a down payment. (https://www.benefits.va.gov/homeloans/)

USDA Loans: The US Department of Agriculture’s Rural Development Program backs these loans for rural and suburban home buyers and there is no down payment requirement.

Conventional Mortgages: Some programs through Fannie Mae and Freddie Mac have programs offering down payment options as low as 3%.  Other conventional loans that are not backed by the US government follow these same guidelines.  Discuss these options with your mortgage lender.

Typically, a higher down payment, along with other factors, can provide a lower interest rate and not having to have private mortgage insurance.  Your mortgage lender will have all the information on these types of loans and what you would qualify for.  Review all your options and decide which loan program is right for you.

If you need help finding a qualified lender, please give us a call and we can recommend a lender for you.