It’s a common misperception that conventional home loans necessitate a 20% down payment. However, this is only applicable for those who wish to dodge private mortgage insurance charges.
Mortgage lenders typically need homebuyers to put forward as low as 3% of the property’s purchasing price, depending on the type of mortgage. Intriguingly, there are certain mortgages that do not demand any down payment!
Here is a rundown of prevalent mortgage sorts and their respective minimum down payment requisites:
Conventional loans. Commonly, the least down payment for conventional loans from Freddy Mac and Fannie Mae stands at 5%, dropping to 3% for eligible first-time homebuyers.
FHA loans. For these, the least down payment is pegged at 3.5%.
VA loans. For eligible military members and certain surviving spouses, these mortgages necessitate zero money down.
Section 502 loans. Also referred to as Rural Home Loans, these mortgages are provided by the US Department of Agriculture. Similar to VA loans, no down payment is needed for qualified borrowers.