Gone are the days when anyone could buy a home with just a promise and signature. No documentation loans allowed virtually anyone to buy a house with no money down with just a simple credit check. After the mortgage meltdown, this all changed. Lenders tightened guidelines and down payments were back.

But how much do you actually need? Must you always find 20% down? The answer might surprise you. There are many ways to buy a home with less than 20% down payment.

  • 0% Down – There are still two loan programs which allow one to buy a home for no down payment. The VA loan and the USDA loan. The VA loan requires the borrower to be a qualified service person or veteran and the USDA loan is for certain areas under the Department of Agriculture.
  • 5% Down – Conventional loans with loan limits can allow one to buy a home with as little as 5% down. These loans do have PMI (Private mortgage insurance) which can be eliminated when the loan amount falls below the 20% threshold.
  • 3 ½ % Down – FHA offers first time home buyers a good home loan for only 3.5% down payment. Again these loans have loan limits and PMI but offer a faster entry into the housing market.

Buying a home doesn’t always mean 20% loan. If you’re considering buying a new home, talk to your lender about your options. And if you don’t know where to start, call me. I have referrals for great lenders who can help you get started.

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.