3 Down Payment Myths You Should Stop Believing Right Now

Mortgage and Lending with Horizon Lending Services, LLC NMLS # 942863

Buying a home is something most people strive for, but many are turned off very early in the process when they begin hearing that conventional loans typically require 20% down or more. For a $100,000 home (which is hard to find as it is), this would mean pulling $20,000 out of pocket just to begin the purchasing process. Not to mention closing costs and the fees associated with moving. But, does it have to be this way?


Myth #1: I Need A 20% Down Payment To Get A Mortgage

Fortunately, the answer is a big fat "No!" You can buy a home without a massive 20% down payment and doing so does not mean having to put up with insanely high interest rates. All you need to do is study your options and learn about the other mortgage programs available to you. The FHA home loan program is among one of the most popular.

The FHA home loan program is ran by the Federal Homeowners Association and it's meant for low to moderate income families who are attempting to buy a new primary residence. The FHA program gives you the opportunity to buy a home with just 3.5% down if you meet the minimum credit score requirements. Those who have a score lower than their minimum still qualify for the program at just 10% down.

However, the FHA is far from your only option. You can actually get a home through a conventional lender at just 3% down thanks to the Freddie Mac HomeOne program being launched in June 2018. This program has no income limits, which makes it accessible even to those who make more or less than the FHA county limits allow. So, if you make higher than the FHA lending household income limit in your county, you can still get a home mortgage through other programs such as HomeOne.

While HomeOne is aimed at first-time homebuyers alongside many other programs, realize that there are low down payment mortgage options meant for people who have already purchase a house.


Myth #2: Down Payments Have To Be All My Own Money

Of course, even if you are just putting 3% down, there's another common misconception that should be cleared up. That is, your down payment does not need to be 100% your money! There are many down payment assistance programs out there that can pay a portion of your down payment.

Check out your state housing association's website for more information. And, no, these programs are not always limited to low-income borrowers. Many states actually have "Good Credit Rewards" and similar programs aimed at high income, high quality borrowers who can show good credit worthiness.


Myth #3: Low Down Payment Loan Programs Are Only For First-Time Homebuyers

Additionally, you can oftentimes have a portion (or all) of your down payment gifted from someone else, like a family member or friend. Depending on the program, the amount of your down payment that can be gifted may be limited to a certain amount to ensure that you, the borrower, actually have some "skin in the game" and that you are financially able to pay on your home mortgage yourself.

The point is, if you do a little bit of digging into your state's resources and federal resources, you'll find that there are plenty of options available to you that will allow you to move into a new home without having to spend years saving up! In fact, you could come up with a 3% down payment in a matter of months if you save correctly. Plus, when you factor in potential assistance programs, you could be buying a home much sooner.


Are you interested in a low down payment home loan? Our mortgage experts at Horizon Lending Services are ready to help you qualify for a home loan that best suits your needs.


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Evelina Tsigelnitskaya
SIB Realty - Sunny Isles Beach, FL
www.SIBRealty.org 305-931-6931

20% downpayment is requires in almost everyone condominium in our area. 

For sure, when you buy a house, downpayment can be much lower. 

Thank you for your information!

May 22, 2018 06:07 AM #1
Valeria Mola
SIB REALTY - Sunny Isles Beach, FL
305-607-0709 SIB Realty

Good morning, that is true. 20% down payment when you buy a condo Sunny Isles Beach. Unfortunately. 

Great post, thank you. A lot of useful information for buyers. 

May 22, 2018 06:09 AM #2
William Feela
Realtor, Whispering Pines Realty 651-674-5999 No.

A truth is that with some money down you can get a better interest rate.  20% down and no PMI

May 22, 2018 06:32 AM #3
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

I'm sure buyers, especially first time buyers, will find this info helpful!

May 25, 2018 06:19 AM #4
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