Low Down Payment Options

FHA Loan

With an FHA loan, you can purchase a single-family home or condominium with as little as 3.5% down. However, loans with less than 20% down require mortgage insurance, which adds an additional cost to your monthly payments. The lower your down payment, the higher the insurance premium ratio, so it’s important to weigh the pros and cons.

USDA Loan

Looking for a home in a rural or suburban area? USDA loans require no down payment, making them a great choice for eligible buyers. Keep in mind that household income limits apply, and mortgage insurance is required for loans with less than 20% down.

VA Loan

Eligible military veterans and active-duty service members can take advantage of VA loans, which provide up to 100% financing with no down payment. VA loans offer a significant benefit for those who qualify, making homeownership more accessible for those who have served.

Other Loan Programs

Non-conforming mortgage options, such as 80/20 setups, allow borrowers to take out a second mortgage to cover the 20% down payment. These programs provide additional flexibility for buyers with unique needs.

Costs and Benefits of Lower Down Payments

Costs

Low or no down payment programs may lead to:

• Higher Interest Rates: Expect slightly higher rates compared to loans with larger down payments.

• Mortgage Insurance: Added monthly premiums apply until your loan-to-value (LTV) ratio reaches 80%. The good news? Once you build enough equity, you can refinance to remove mortgage insurance.

Benefits

Despite the extra costs, there are key advantages:

• Lower Upfront Costs: Spend less money out of pocket at the time of purchase, leaving you with more cash for other expenses or investments.

• Potential for Higher ROI: The value of your home’s appreciation remains the same, regardless of how much you put down. Smaller down payments may even increase your rate of return.

• Tax Benefits: In the early years of your loan, a significant portion of your payment goes toward interest, which is typically tax-deductible.

How Much Should You Put Down?

Deciding on the right down payment amount requires careful consideration. While your lender will qualify you for a certain amount based on your income, it’s important to choose a payment level that feels comfortable for your budget.

At Snap Mortgage, we understand that every buyer’s situation is unique. Our loan specialists will work with you to customize a plan that aligns with your goals and financial comfort level.

Have Questions?
We’re here to help! Contact Snap Mortgage today to discuss your options and find the low down payment program that’s right for you.