Typically, mortgage lenders want borrowers to put 20% down on a home purchase, lowering lenders’ lending risk. However, a 20% down payment is not a requirement.
You might not have enough cash for a 20% down payment on a home loan. Or, you might not want to liquidate your assets or use all your money for a down payment.
If you qualify for a home mortgage, borrowers have several options regarding down payments.
Private Mortgage Insurance (PMI)
If you do not have a 20% down payment, you could qualify for a mortgage with a lower down payment by purchasing private mortgage insurance (PMI).
The insurance premium can be paid monthly with your mortgage, as a lump sum at closing, or built into your mortgage rate (LPMI). The insurance doesn’t have to be paid for the loan term until your loan-to-value (LTV) ratio reaches around 78-80%, depending on your lender.
3% Down Payment for Conventional Loans
Conventional Mortgages are free-standing mortgages offered through private lenders, such as a bank, credit unions, or mortgage companies.
While there are several conventional loans, such as Fannie Mae or Freddie Mac, that require anywhere from 3.5-5% for a down payment, depending on credit scores.
3.5% Down Payment for FHA Loans
FHA (Federal Housing Administration) home loans require a 3.5% down payment and are commonly easier to qualify especially for first-time homebuyers.
Zero Down Payment for VA Loans
VA loans offer competitive rates with low or no down payments and do not require mortgage insurance.
A VA home loan is a mortgage loan guaranteed by the U.S. Department of Veterans that the U.S. Department of Veterans Affairs guarantees veterans or their eligible surviving spouses.
Zero Down Payment for USDA Loans
The USDA Rural Development Guaranteed Housing Loan Program offers mortgages with no down payment and allows you to finance 100% of the property value.
The loans have maximum household income limits that vary by County and income limits that change annually.
Marimark Mortgage
Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in mortgages for first-time homebuyers, conventional home mortgages, refinance loans, reverse mortgages, and FHA, VA, and USDA mortgage options. In addition, we’ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.
To get started with a mortgage to buy your next home, please fill out our Quick Mortgage Application or contact us.
The Marimark Mortgage Newsletter will keep you informed with important events in the mortgage industry that could impact your finances.
We especially focus on ways to save money on your current and future mortgages. And, we continually share the information we share with our clients, because we believe informed consumers are the best consumers.
Real estate agents, and other professionals in the industry, will receive an ongoing wealth of information that will help them serve their clients.
