• David Cade

Down Payments Depend on Your Mortgage Type



A question from home buyers, particularly first-timers, is: “How much do I have to put down to buy a house?” The answer is: It depends. The most important of those factors will be your credit, followed by income.


Conventional loans

These mortgages are loans obtained through Fannie Mae or Freddie Mac. Based on a higher credit score, you may be looking at a minimum down payment of 3%.


This is definitely something that first-time homebuyers should be looking into when they start the financing process. With a down payment this low, you will require mortgage insurance, which, when certain conditions are met sometime in the future, can be removed.


Also, ask your mortgage professional about what is called the HomeReady mortgage program, obtained through Fannie Mae. This program caters to low-to-moderate-income borrowers and those purchasing in lower-income areas.


FHA loans

The minimum down payment with FHA programs is 3.5%. This program is ideal for borrowers whose credit scores may be on the low side.


While FHA is good for people who may be unable to qualify for conventional financing through Fannie Mae or Freddie Mac, the challenge here is that these loans are generally more expensive to own. This is due to the fact that, unlike conventional mortgages, the mortgage insurance will be in place for the life of the loan.


VA loans

VA loans are designed for military personnel, veterans, and military families. The list of those who are eligible for this home-buying military benefit include:

  • Veterans

  • Active-duty personnel

  • Reserve members

  • National Guard members

  • Some surviving spouses

You must also have suitable credit, sufficient income, and a valid Certificate of Eligibility (COE). And you must use the home for your own personal occupancy.


USDA loans

A USDA loan is a special type of a zero-down payment mortgage that eligible homebuyers in rural and suburban areas can get through the USDA Loan Program, which is backed by the United States Department of Agriculture (USDA).


The USDA backs a variety of loans to help low- or moderate-income people buy, repair, or renovate a home in a rural area. For eligible buyers, they feature great benefits such as 100% financing with no down payment and below-market mortgage rates.


You will still be able to get seller credits to help you with these other outlays, but note: seller credits can’t be used to help you with a down payment.

4 views