Down Payments Explained

Looking for some guidance on down payments? You’ve come to the right place! If you’re in the market to buy a home, you’ll need to put some money forward as a down payment. Many people think you have to put down 20%, but that’s a common misconception. Sure, putting 20% down will put you in a comfortable post-purchase position, but there are many financing options available for you to choose from. Some loans can be as low as 3.5-5% down. USDA loans and VA loans can even be 0% down! That’s why it’s always good to explore all options before deciding homeownership is out of reach.

Financing Options with Lower Down Payments: 

FHA Loans 

An FHA Loan is backed by the Federal Housing Administration and is one of the easiest loans to qualify for with a lower down payment. With an FHA Loan, you can put down as little as 3.5% of the purchase price of a home. Your credit score has to be at or above 580 to qualify for a 3.5% down payment. You can qualify to put down 10% if you have a credit score lower than 580. 

Conventional Loans 

When you think of a mortgage, conventional loans are what typically come to mind. They’re sought after by a whopping 60% of home loan applicants. Conventional loans can require a minimum of 3% down payment, and go as high as 10%-20%. What are the requirements? Most applicants must have a credit score of 620-640 to qualify for conventional loans. The higher your credit score, the lower your interest rates will be. Learn more about conventional loans here

USDA Loans 

If you’re buying in a rural area, check out USDA Loans! USDA Loans are another government-supported program and with them, you don’t have to put any money down. To qualify for USDA Loans you must be buying in what’s to be considered a rural area. Credit and income requirements for this loan vary by location. Learn more about this loan type here

VA Loans 

This is another 0% down option, but in order to qualify, you must have a history of military service. VA Loans are provided by private lenders, to learn more about them click here

Ways To Fund A Down Payment:

Even with these lower down payments, buying in this housing market can entail coming up with thousands of dollars. Here are some possible sources to fund your home down payment:

The best way to review your options is to meet with a qualified and experienced lender that can assess your financial standing. They’ll be able to explain the terms and conditions of each option and help you choose a loan that fits your needs. If you need a lender recommendation, give us a call at 562-896-2456.

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About the Author

Shannon Jones has been selling real estate since 1998 and specializes in listing and marketing homes. She has consistently been one of the top Realtors in the Long Beach area. Prior to her award-winning career in real estate with the Shannon jones Team, Shannon has had successful careers in journalism and public relations. She holds a bachelors degree from UC Irvine and a masters degree from UC Berkeley. Shannon holds E-Pro, CDPE (Certified Distressed Property Expert), and PSC (Pre-Foreclosure Specialist) certifications. Shannon is very personable and maintains a very strong moral compass, always putting the best interest of home buyers/sellers above monetary goals. A California native, Shannon enjoys gardening, travel, reading, cooking and poker when she’s not selling homes MY DESIGNATIONS Lic# 01247705 | CDPE (Certified Distressed Property Expert) | E-Pro | PSC (Pre-Foreclosure Specialist) MY SERVICE AREAS Anaheim Bellflower Buena Park Carson Cerritos Cypress Downey Fountain Valley Garden Grove Huntington Beach La Palma Lakewood Long Beach Los Alamitos Los Angeles County Norwalk Orange County Rossmoor San Pedro Seal Beach Signal Hill South Bay Westminster