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Homestead Financial Mortgage

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What’s the Minimum Down Payment I Need to Buy a Home?

For anyone trying to save enough money to buy a home, especially their first home, the question always comes up about home much does a person need to put down on a home. This amount varies based on loan type. Here is a summary along with the pro’s and cons of each.

Conventional Mortgage​ : ​Typical down payment​ 5%

HousePros

​​​​The cheapest effective rates are on Conventional financing.

Cons

​The typical Conventional mortgage has the largest down payment making saving up challenging. Conventional is typically the most demanding from a credit qualifying standpoint.

Fits you if

You have great credit, have at least 5% down.

FHA Mortgage:​ ​​Typical Minimum Down Payment 3.5%

Pros

​​​​Easier to credit qualify for. Low down payment.

Cons

​Very high mortgage insurance, making the monthly payment higher and more costly over the long run.

Fits you if

​You have good credit(above 640), have at least 3.5% down and can’t wait to get your credit score higher or a larger down payment and need to buy a home now.

USDA : ​Typical Minimum Down Payment 0%

Pros

​Low down payment. Easier to credit qualify.

Cons

​Can’t make too much money, only for specific rural zip codes. Income and zip code eligibility can be found at: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Fits you if

​You fit the criteria above, your score is above 640 and can’t or don’t want to save any additional down payment funds to go conventional.

VA : ​Typical Minimum Down Payment 0%

Pros

​Low down payment. Easier to credit qualify.

Cons

​Only available to Veterans. Higher Mortgage Insurance.

Fits you if

​You are a veteran with stable enough income to purchase a home.

To conclude

Conventional mortgages require the highest down payment, and are the hardest to qualify for. VA and USDA both allow you buy a home with no money down but are more difficult to obtain and FHA is easier to qualify for with a small down payment.