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.
Jill Wente is the best real estate professional we've ever worked with. She is organized, professional, knowledgeable and her attention... read moreJill Wente is the best real estate professional we've ever worked with. She is organized, professional, knowledgeable and her attention to every last detail was flawless. She went above and beyond to help us find a buyer for our home. read less