Mortgage 101
June 7, 2022

A Guide to Low Down Payment Mortgages

Estimated reading time: 2 minutes

When purchasing a home, one of the largest up-front expenses is the down payment. A financial advisor may traditionally tell people they should put 20% down on a home. After all, that was the median down payment amount in 1989. However, the National Association of Realtors reported that in 2021, the average down payment for first time homebuyers was 7% or less. While there may be advantages to a larger down payment, you may still qualify for a mortgage for your dream home with a low or no down payment program.

Programs With Lower Down Payment Requirements

If you can’t afford to put 20% down, there are a variety of programs that may fit your home financing needs. Different loan programs have different requirements, including some with lower down payments.


A conventional mortgage typically requires a 5% down payment, although those with first-time home buyer status can use as little as 3% down. A conventional mortgage requires Private Mortgage Insurance (PMI) if a borrower puts less than 20% down.


FHA loans are backed by the government and require very small down payments. You may be able to get an FHA loan with as little as 3.5% down.


Guaranteed by the U.S. Department of Veteran Affairs, VA loans offer no down payment, no monthly mortgage insurance, and liberal qualifying requirements. VA loans are available for Veterans, active service members, National Guard members, reserve members, and some surviving spouses.


USDA loans exist for rural and suburban homebuyers located in specific areas that meet certain eligibility qualifications. They’re guaranteed by the U.S. Department of Agriculture’s Rural Development Program and don’t require a down payment.

Figuring Out Your Best Options

Your best down payment amount depends on your home goals and financial situation.

Evaluate Your Budget

When planning your payment, avoid using all your savings for a down payment. You’ll also need funds for closing costs and future maintenance. To get a better idea of what your monthly payments will look like with different down payments, experiment with a mortgage calculator.

Assess Your Home Needs

Making a list of aspects you absolutely must have for your new space can help you accurately find your dream home. Would you prefer to live in a rural or urban neighborhood? Will you need specific healthcare access? Are you planning on starting a family in your new home? Expressing your needs and being transparent about your financial situation can help experts, like your Real Estate Agent and Loan Originator, provide opportunities that fit your circumstances.

Consider Your Options

Working with an experienced Loan Originator ensures your mortgage success! Contact us today to discuss your best loan options and what down payment will work best for our unique situation.

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