How much do you need for a down payment?

Over the last couple of years, there has been a rumor floating around that you need 20% down to get a mortgage.  That is a rumor!  There are several programs that require 5% or less for a down payment.  Here is a breakdown of some different options!

Conventional loans –

Conventional loans require a minimum of 5% down.  If you are putting less than 20% down, you will be required to have mortgage insurance.  There is still one program where you can put 3% down but you have to use a specific first time home buyer program.  In Minnesota, that means a program through MN Housing that still allows for 3% down.  There is a possibility of doing a 5% down loan with all gift money depending on your income limits.

FHA loans –

FHA requires a minimum of 3.5% down.  You can put more down if you choose to.  The down payment can be all gift money.  FHA loans are assumable which may help when you sell the home.

VA loans –

VA loans are still zero down if you have VA eligibility.  There is no monthly mortgage insurance but there is a VA guarantee fee that is added to your mortgage.   If you are a disabled vet, the guarantee fee may be reduced or eliminated.

USDA loans –

USDA loans are in rural areas in most of the US.  In Minnesota, there are many areas that qualify for a USDA loan and they are all zero down.  There is a guarantee fee of 2% and a monthly fee of .40%. That monthly fee does not go away but it is substantially lower than the mortgage insurance required on FHA loans.  There are income limits for USDA loans but they are based on the number of people in your family.

If you aren't sure what you may qualify for, talk to your loan officer about your options.  If you have had credit issues or a foreclosure, you may have to use FHA financing instead of conventional financing.  There may be some first time homebuyer programs that can help you with your down payment.  There are still a lot of different options for most home buyers, talk to your loan officer or call me and we can talk about what is the best option for you.

Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants – EmailWebsite

Written By

Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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