Video · 1:16
How Much Do You Need for a Down Payment on a House?
It depends on the loan. Conventional loans can start at 3% or 5% down, a typical FHA loan requires 3.5%, and VA and USDA loans can require nothing down for eligible buyers. Put down less than 20% and you will usually pay mortgage insurance, which adds to your monthly payment.
Key points
- Conventional loans can start as low as 3% or 5% down, depending on the program and whether you qualify as a first-time buyer. Many people who owned a home years ago still count as first-time buyers.
- A typical FHA loan requires 3.5% down. Some lenders, including the one I work with, offer a zero-down FHA option.
- Eligible service members and veterans can buy with a VA loan and no down payment. VA loans have no monthly mortgage insurance, though most borrowers pay a one-time funding fee.
- USDA loans can also be zero down for homes in areas USDA classifies as rural.
- Under 20% down usually means mortgage insurance, which can add a few hundred dollars or more to your monthly payment.
Transcript
How much do I actually need for a down payment? That depends on several factors. The first is what loan product you're going to be using. Conventional loans can be 3% or 5%, depending on whether you are a first-time homebuyer or not. And I want to clarify that a first-time homebuyer for a conventional loan only requires that you haven't owned a home in the last 3 years. So a lot of people who have owned homes in the past can still qualify for that first-time homebuyer program.
But there are also some loan products out there that are no-money-down products, so you could buy with as little as $0 down. If you have served in the military, you can potentially qualify for a VA loan, which is a 100% loan-to-value product. There are USDA loans if you're buying in what is classified as a rural area. My lender that I work with has a zero-down FHA loan. The typical FHA loan is a 3.5% down program.
But I will say that if you're putting less than 20% down on a home purchase, chances are you're going to have mortgage insurance, which is going to raise your monthly payment by a few to several hundred dollars per month.
Transcript lightly edited for readability.
Keep reading
- How much money you need to buy a house in Charleston
- SC first-time homebuyer programs and down payment help
- VA loans for Charleston-area military buyers
- Financing: current rates, a payment calculator, and a lender I trust
Sources
- HUD: Dispelling Myths About Affording a Home: the FHA minimum down payment of 3.5%.
- VA Home Loans: VA loan eligibility and the no-down-payment benefit.
- VA funding fee and closing costs: the one-time funding fee and who is exempt.
Already searching on Zillow®? Supercharge that search today!
Connect with me as your agent and I will turn that endless scroll into a focused shortlist, with a local advisor answering every Charleston question along the way.
Connect with me on Zillow