How Flexible Are Home Loan Down Payments?
June 23, 2025
Compare that to conventional loans of a similar nature to learn more about which loan type might be best for your needs. It's true that some home loan programs may allow down payment assistance (FHA loans, for example) but some home loan options such as One-Time Close residential construction mortgages do not. Check the fine print for the home loan type you need.
Conventional Loans
You don't always need 20% down for a conventional loan but in some cases you definitely will if you want to avoid mortgage insurance.
Some options let first-time buyers put down as little as 3%. Other common down payments are 5%, 10%, or 15%. However, if you put down less than 20% on a conventional loan, you'll usually pay Private Mortgage Insurance (PMI). The main benefit of a conventional loan here is that you can cancel PMI once you build up equity in your home and your loan-to-value ratio reaches 80% or better.
This lowers your monthly housing costs. This is good for those who expect to build equity fast or can afford 20% down from the start, avoiding PMI completely.
FHA Loans
As mentioned above, an FHA loan's big advantage for some borrowers is its low minimum down payment. If you apply with FICO scores of 580 or higher, you typically need 3.5% of the home's price as a down payment.
This makes homeownership possible for many without large savings. But, the trade-off for this lower entry is mandatory mortgage insurance, which works differently from conventional PMI. There are exceptions to these rules in certain cases, but those would be handled on a case-by-case basis.
VA Loans
One of the greatest benefits of a VA loan is the 0% down payment option. Eligible veterans, service members, and qualifying surviving spouses may be allowed to finance 100% of the home's purchase price. This removes a major barrier to homeownership for many.
While a down payment is not required, borrowers can choose to make one if they wish, which can reduce the loan amount and the VA Funding Fee. This zero-down feature is a primary reason VA loans are a top choice for eligible borrowers. But these loans are not available to the general public, so they are an option for qualifying uniformed service members and qualifying spouses only.
USDA Loans
Similar to VA loans, USDA loans also offer 0% down payment options for eligible borrowers who meet income and home loan purchase location requirements.
This means you can potentially finance up to the entire purchase price of the home, making homeownership accessible without the need for a large upfront sum. The USDA loan program aims to help low—to moderate-income individuals in rural areas achieve homeownership, and the zero-down option is one way of doing that.
FHA Loan Articles
August 19, 2026Homebuyers who have enough cash for a down payment still need to consider their full financial picture before choosing between a conventional mortgage and an FHA loan. Having cash on hand changes the math for both options, but savings alone won't make a conventional loan the automatic winner. Credit scores, current debt, and the type of property you want to buy all determine which loan will cost less over time.
August 11, 2026Homeowners with FHA adjustable-rate loans need to track their loans more closely. That is because FHA ARM loans start with introductory interest rates that eventually expire and are subject to change afterwards based on market rates. When interest rates rise, monthly housing payments climb on ARM loans, pushing many homeowners to consider refinancing into a fixed-rate mortgage.
August 10, 2026If you want to buy a home with an FHA mortgage, you must set up an escrow account to cover property taxes, homeowner insurance, and upfront closing expenses. While the FHA loan program has rules for funding these accounts, buyers often do not realize those rules can include approved and unallowed sources for escrow funds. What do you need to know before you set up and fund your escrow account for an FHA mortgage?
August 3, 2026Buying a home in a high-cost area requires understanding how FHA loan limits shape your financing options. Does the house for sale have a price above the local FHA loan limit? You may need to explore your jumbo loan options. There are conventional jumbo loans and FHA versions. Which is right for you? Much depends on your financial needs, plans, and goals for the loan.
July 30, 2026There is a common misconception about FHA loans that only a first-time home buyer can use the program. This is not true; repeat buyers can qualify for an FHA loan, but why does this misconception exist? Partially because state and local programs have first-time buyer requirements for down payment and/or closing cost assistance programs. So while you do not need to be a first-time buyer to get an FHA loan, you may need to meet that definition to qualify for down payment help.
