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Down Payment Options

First let's dispel the myth that you must always have a minimum down payment of 20% to buy a new home!   The fact is there are a multitude of options with regard to down payment.  There could be pro's and con's associated as well depending on your specific situation.

Zero Down

There are actually options to buy a home with zero down payment.  The best is the VA loan.  If you have served in the military then you most likely qualify and have VA benefits.  

Another zero down option is the USDA program.  To qualify you can't make too much income as a household and the property needs to be considered rural per USDA's eligibility map. 

First Time Buyer

A first time home buyer is defined as someone who has not purchased or owned a home in the last 3 years.

If this is you there are specific programs to help you with your first home.  Income and property location restrictions apply but if qualified you can purchase with as little as 3% down payment and also receive discounts on your rate and mortgage insurance. 

Down Payment Assistance

Another option we can consider is down payment assistance.  Qualifications can be tied to several things depending on which program but most commonly its income and property location.  

If qualified you can receive up to 5% of the purchase price towards down payment and closing costs in the form of a grant. 

So what about 20% down.  While it is not necessary it comes with some advantages.  When putting down 20% you are not required to included mortgage insurance and you are eligible to manage your own tax and insurance escrows. 

For conventional lending we see down payments typically at 3%, 5% or 10% down depending on qualifications and circumstances.

20% Down 

The Point is...

There are a lot of options for down payment when it comes to getting a new home.  From FHA with 3.5% down with relaxed credit requirements.  Maybe a rural property or a Veteran status with zero down.  Maybe adding an assistance program or a first time home buyer program.  3%, 5%, 50% down payment or anything in between, there isn't a wrong answer, it depends on your needs. 

In the end it pays to look at all  your options and evaluate the benefits of buying and the costs of waiting to see if owning a home is the right financial decision for you.  If you are considering the purchase and have some questions, reach out to us and we can spell it all out in simple options and help you determine a timeline and a down payment option that fits your needs and goals! 

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