Are you planning to buy a home but don’t know how much money you need to put down? The amount required will depend on the loan program you choose. In this article, we’ll take a closer look at the three most common loan programs and what you need to know about each one.
When it comes to buying a home, the amount of money you need to put down will vary depending on the loan program you choose. There are three primary types of loan programs: Conventional, Federal Housing Administration (FHA), and Veteran Affairs Loan (VA).
Conventional loans are the most common loan programs, and generally require a FICO score of 640 to qualify. Under the Conventional umbrella, there are different programs that require a down payment of 5% to purchase price, with some requiring as little as 3%. For instance, a $100,000 purchase price may require a down payment of just $3,000, but could be as high as $5,000. Although Conventional loan rates are typically higher than FHA, they are more affordable in the long run because mortgage insurance is not necessary once the borrower has 21% equity in the property.
FHA loans are backed by the Federal government and require a minimum credit score of 580, although rates tend to improve with a score of 620 or higher. A down payment of 3.5% of the purchase price is necessary, which means that a $100,000 purchase price would require a $3,500 down payment. The rates are often low, but the program requires the borrower to pay mortgage insurance for the life of the loan.
VA loans are special programs available to veterans of the US Armed forces, and do not require any down payment. A qualified veteran can purchase a home with 0% down, and there is only a one-time mortgage insurance payment taken at closing. VA loans do not have annual mortgage insurance.
If you do not have the money for a down payment, local state and county programs can offer assistance with up to 10% of your purchase price in down payment and closing cost assistance. You can check your eligibility in just 45 seconds by clicking the button below. There is no cost or obligation to buy anything, and no credit card is required.