When buying a house, coming up with the resources for a down payment can be the trickiest and most stressful part of the process. If you’re looking at conventional mortgages, the standard 10-20% of the total price that you need to put down may be the largest payment you’ve ever made.

But do you have to put down a large down payment to buy a home?

The good news is that the answer is no.  You can save yourself a significant part of your current capital by looking into these alternative funding sources that allow you to purchase your forever home without a large down payment. 

Veteran’s Affairs (VA) Loans 

For members of the military, veterans, and military spouses, VA loans require zero down payment if the sales price isn’t more than the property’s appraised value. Closing costs are also lower with VA loans, and you won’t be required to have mortgage insurance, so your overall payments maybe lower.

Federal Housing Administration (FHA) Home Loans

FHA loans can also be helpful for a variety of buyers. For those purchasing their first home, FHA loans may only require a down payment as low as 3.5% for a property with up to four units. Other benefits of FHA loans include more flexibility for applicant credit requirements and reduced closing costs. However, you’ll have to pay a required mortgage insurance premium on any FHA loans, which will be bundled into your total monthly payments.

United States Department of Agriculture (USDA) Rural Development Loans

USDA loans don’t require a down payment, but the property you’re looking at must be eligible for the program. While a home in the city won’t qualify, you’d be surprised at the broad definition of “rural.” Buyers will need to have reasonable credit and must have consistent income that comes in under a maximum cap, and you can’t already own a home. USDA loans also don’t require mortgage insurance, but there are small upfront and annual fees that will be added to your loan payments.

Fannie Mae HomeReady Home Loans

Fannie Mae’s HomeReady mortgages are meant for individuals with low to moderate income and can have down payments as low as 3%. These loans are not limited to first-time buyers only, and they automatically include a reduced mortgage insurance. Fannie Mae also sells homes they own at a significantly reduced rate through the HomePath program, which can be financed with a HomeReady loan.

EquityBuilder Home Loans

Rather than using cash for a down payment, apply it towards a lower interest rate and shorter loan term. The result is more dollars toward your loan principal and build equity faster.

If you’re ready to explore loan options with reduced down payment requirements, answer a few questions here, and a home lending expert will contact you.

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