The Scoop on Down Payments: They Don't Need to be 20%

Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI

The Scoop on Down Payments:

They Don't Need to be 20%



     It seems like a lifetime ago, but in actuality, it’s only been (approximately) 8 years since our nation’s housing crisis began …

     Since that time, there has been a tightening of Mortgage Underwriting Standards.  Much needed, as it’s obvious that the underwriting and lending standards previous to the crisis were way too lax. 

     New safety guards and regulations meant to protect and help Borrowers have now been implemented.  Much has been written about them.  All you have to do is a simple online search utilizing any of these terms (or many others): 


  • Mortgages 
  • Home Buying 
  • Mortgage pre-approval requirements 
  • Documentation Needed for Mortgage Application
  • TRID 
  • Down payments 
  • Underwriting 
  • More

     ... you’ll reap page after page of articles and editorials alerting and educating current and potential homeowners and mortgage borrowers to the changes that have occurred as a result of the crisis.  

     Also addressed are the pros and cons of the changes and how homeowners and borrowers can and should utilize the new standards to their benefit.  But it should be noted that the one thing in financing left largely unchanged throughout and after the crisis is:  DOWNPAYMENT.   

     So if you’ve been hearing/reading that you need a full 20% down in order to buy a home?  That’s wrong.

     Yes, it’s true that the ABC’s of financially building and saving a Down Payment is vastly more challenging within the current economy.  But the actual percentages surrounding Down Payment requirements for financing/borrowing have remained vastly unchanged.

     Both prior to the housing crisis and currently, the following were/are available: 


  • 3.5% Down Payment FHA loans 
  • 0% Down Payment VA loans (Qualified Veterans
  • 3% Down Payment Conventional loans 
  • 0% Down Payment USDA loans (Eligible Applicants – Eligible Locations)
  • Many States/local municipalities have Grants or resources available for Borrowers in need of Down Payment Funds

       It should be noted that the topic and details surrounding Down Payments are hugely important.  So you’d think that every effort would be made to write articles or report factual information, right?  

     Yet misleading or inaccurate information remains readily available.  Such was the case with a radio advertisement I heard this weekend. 

     Hearing incorrect Down Payment info conveyed in that radio message about made my head spin.  I felt compelled to take action, as bad info is keeping too many from their home buying dream.

     So what is the single most important FACT hopeful Home Buyers need to know about current Down Payment requirements?   It’s simple …

You DON’T need 20% Down!

What's also a fact: 


  • A new Home Buyer/Borrower may be required to hold Private Mortgage Insurance if putting less than 20% down 
  • That Private Mortgage Insurance does NOT keep them from buying. (The obtaining of Mortgage Insurance is almost a foregone conclusion for qualified Buyers
  • Private Mortgage Insurance is mandatory on FHA Government-Insured Loans

But it’s also true that:  Down Payment Funds can come from many allowed sources. 


Those sources include:


  • Gifts from relatives  
  • Loans from Retirement Funds  
  • Life Insurance Policies with Cash Value  
  • Stocks  
  • Bonds
  • Inheritance  
  • Traditional Sources of Savings, Checking, Mutual Funds, Money Market Accounts
  • Documentable Bonuses from Employers


     Are you a hopeful Home Buyer or potential Borrower?  

     If you’re hearing from someone or reading somewhere that you’re required to have a 20% Down Payment to buy or finance a home?  Keep moving.  That’s not true.  Options and requirements needed for a lower Down Payment may exist elsewhere.

     Don’t give up!   Seek additional advice regarding your needed Down Payment.  Exhaust all your options and information resources. 

     Try talking with another Lender.  Get a second opinion.   Because it’s also a FACT that financing options can vary between Lenders.  Mortgage Programs, Mortgage Program availability, options, requirements can also change and evolve.  

     And if you still receive a negative answer?  Don’t get discouraged.  Any setback may be just that, a setback.  And only temporary, for all the reasons mentioned above ...

 *  Watch for my upcoming post on Closing Costs ...

*    Hoping to Buy or Refinance a home in Chicago or elsewhere in the Chicagoland area? Contact me! I'll put my 40+ years of Mortgage experience and expertise hard to work on your behalf.      

     I can be easily found at:

Gene Mundt

 Mortgage Originator - NMLS #216987 - IL Lic. #031.0006220 - WI Licensed

American Portfolio Mortgage Corp.

NMLS #175656

Direct: 815.524.2280

Cell/Text: 708.921.6331 

eFax: 815.524.2281




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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656


Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 


Your Referrals & Testimonials are Always Greatly Appreciated! 




Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Roy Kelley 07/10/2016 06:00 PM
  2. Gabe Sanders 07/12/2016 03:43 PM
  3. Lise Howe 08/26/2016 11:43 PM
  4. Bill Roberts 08/27/2016 03:33 AM
Lending / Financial
Illinois Will County New Lenox
Chicago Area Real Estate BUZZ!
1st Time Buyers
Advice for Buyers
down payments
down payment options
down payment requirements
mortgages and lending changes
saving to buy a home
buying a chicagoland home

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Pat Champion
Coldwell Banker Camelot Realty - Mount Dora, FL
Call the "CHAMPION" for all your real estate needs

This is great information for home buyer's in today's market. Thanks for sharing I hope you have a great afternoon.

Jul 07, 2016 04:43 AM #1
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I'm a huge fan of bringing 20% to the table, but I am aware it's not always possible and that some programs exist for that.  Mostly we sell vacation homes where there is no option.

Jul 07, 2016 06:50 AM #2
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Gene you are right there is a lot of bad information about down payment requirements and the value of a LARGE down payment.  I talked to a borrower today who has credit scores in the low 500's and was told by their Realtor that if they put down 50% they can get a conventional mortgage. 

Jul 07, 2016 07:32 AM #3
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

3% down conventional?  Holy Gads ... I need to get more intel on that. Thanks for another great post.

Jul 07, 2016 09:25 AM #4
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks Gene.  This is an excellent post that should be welcome reading for many young and/or first time home buyers that don't know what the down payment requirements are for today's loan products.

Jul 07, 2016 08:32 PM #5
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is excellent information to share with prospective home buyers and their agents.

Jul 07, 2016 10:32 PM #6
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Lots of options foor Buyers these agents suggest that they work with lenders who have a variety of financing options.

Jul 08, 2016 01:00 AM #7
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker and Attorney Licensed in DC, MD, VA,

This is so well presented and such an important topic! Thanks for posting it! 

Jul 10, 2016 08:43 PM #8
Sandy Padula and Norm Padula, JD, GRI
HomeSmart Realty West & Geneva Financial, Llc. - Carlsbad, CA
Presence, Persistence & Perseverance

Excellent blog post, Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi ; thanks for all the information!

Jul 10, 2016 09:52 PM #9
Sybil Campbell
Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia - Williamsburg, VA
REALTOR® ABR, SFR, SRES Williamsburg, Virginia

If everyone needed to have a 20% down payment we would be selling a lot less homes!  Great info, thanks for sharing.

Aug 27, 2016 12:10 AM #10
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Hi Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi I don't know how I missed this the first time around, but I agree with Lise Howe This deserves many re-blogs, so I shall also re-blog it.

Bill Roberts

Aug 27, 2016 03:28 AM #11
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

SO happy you posted this Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi as many buyers are confused

Aug 28, 2016 11:19 PM #12
Gayle Rich-Boxman Fishhawk Lake Real Estate
John L Scott Market Center - Birkenfeld, OR
"Your Local Expert!" 503-755-2905

Gene, this was brilliantly written and done in a manner that the average homebuyer can understand (not always the case in the mortgage biz, I'd say). Did you contact anyone about that misleading ad you heard on the radio?? 

I think it's good that buyers know also that they can potentially get a rehab loan. So, if they've got a "fixer" in mind, that's a creative way of financing as well. But, you're the expert, I'll leave that up to you. 

Sep 24, 2016 01:32 AM #13
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708.921.6331 - 40+ yrs experience
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