Do I need a 20% down payment to purchase a home ? | #RealEstateTalk

Do I need a 20% down payment to purchase a home? No, it’s a myth that you need a 20% down payment to purchase a home. There are numerous loans available with much smaller minimum down payment requirements.


Stacey Gross answers questions on minimum down payments amounts in #RealEstateTalk episode 20. She has been in the mortgage business for over 20 years and has helped over 2,600 people buy a home. Stacey Gross is the branch manager for Gibraltar Mortgage Services. 

Did you know that with a conventional loan you can put down as little as 3%?  The loan does have a requirement that you are considered a first time home buyer. You can’t have owned a home in the past 3 years to be considered a first time home buyer. Read our series for first time home buyers If you don’t qualify as a first time home buyer, you can get a conventional loan with a minimum down payment of only 5%. 

Other loan options with small down payments are FHA, VA, and USDA. An FHA loan allows for a low 3.5% down payment. If you’re a veteran you can qualify for a VA loan and finance the entire amount of the sales price. Another zero down financing option is a USDA loan. It allows for 100% financing as long as the property qualifies. Many people still think that you need 20% down payment to purchase a home but that’s not the case at all. 

According to Stacey Gross, most borrowers / buyers will make down payments in increments of 5%. Instead of putting 5% down, they would put down 10% or 15% but again you don’t have to.  You can still get a conventional loan with only a 5% down payment. 

“If I don’t have 20% down payment and instead put down 3% or 3.5% are there any additional fees I have to pay?” Stacey responds with “there’s not a penalty for putting a lower down payment. When you put less than 20% down on a conventional loan, you will have to pay mortgage insurance or do a buyout of mortgage insurance. There are other options to get rid of mortgage insurance but the loan has to be insured in some way when you put less than 20% down.” 

A lower down payment costs you more in mortgage insurance but there’s no penalty nor additional fees or costs with putting down a lower payment. 

If you have additional questions regarding mortgage options and minimum down payment requirements, you can reach Stacey Gross @ 281.831.987.