Low on Down Payment Cash? FHA Not Only Option
With interest rates at historical lows and home prices being more affordable than they have been in decades, many people know that now is a great time to buy a home, but they may be worried about large down payment requirements.
When looking to finance a home, two of the most common questions asked include:
- What loan options require a low (or no) down payment?
- Is down payment assistance available?
Traditional loan options
While it is true that a 20 percent down payment is still required to avoid mortgage insurance for conventional loans, there certainly are mortgage options that require a low or no down payment. Almost all mortgage lenders offer at least these options:
- VA mortgages requiring zero down.
- USDA mortgages requiring zero down.
- FHA mortgages requiring 3.5 percent down.
- Conventional mortgages requiring 5 percent down.
Down payment assistance
In many parts of the country, down payment assistance programs are available. These programs usually work in conjunction with a local government in the form of a bond, government grant or community development program.
The U.S. Department of Housing and Urban Development maintains a database of state and local home buying assistance programs on its website.