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
June 30, 2026FHA loans offer low down payment options and more forgiving credit requirements for borrowers who may not qualify for a conventional mortgage or need to save more money out of pocket at the front end of the mortgage. But even with more forgiving credit requirements, some borrowers are tempted to omit certain debt information from their home loan applications. What does it mean to conceal a debt or financial situation from your loan officer?
June 30, 2026Some borrowers start working on their credit scores but get impatient with the process because they can't predict when their efforts will change their FICO scores. How long does it take for your FICO scores to update when you pay off a loan, reduce your credit card balances, or take other steps to make yourself a better credit risk? The short answer is that credit reporting procedures are not standardized, and it may take more time than you realize to get those positive credit actions added to your credit report.
June 29, 2026Mortgage interest rates are "moving targets" shaped by national economic trends and the borrower's specific financial profile. What is your FHA loan interest rate? Much depends on the financial data you bring to the table. Lenders set interest rates daily based on a snapshot of market conditions, but the rate ultimately offered also reflects risk, equity, and the lending institution's internal operational costs.
June 28, 2026An FHA appraisal differs from a conventional appraisal. While the goal of a conventional appraisal centers on market value, the FHA appraisal also focuses on the buyer's safety and soundness. FHA lenders select the appraiser, not the home buyer.
June 24, 2026FHA loan closing costs vary by property price and geographic location, rather than by a single nationwide flat fee. Total settlement charges combine percentage-based fees, local government taxes, and marketplace service costs. If you are new to buying a home, you'll want to get familiar with the closing cost issues discussed here to avoid budgetary surprises later on.
