Preparing to Purchase or Refinance a Home in 2025
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There’s a common misconception among homebuyers that you need to make a 20 percent down payment on your home. While it’s true that making a larger down payment will lower your monthly mortgage payments and help you avoid taking out private mortgage insurance (PMI) on conventional loans, it can be difficult to save that much money. Many FHA and conventional loan programs have low down payment options that allow people with a variety of financial situations to find a loan that works for them.
How do Low Down Payment Programs work?
It’s all in the details. Low down payment programs are options within standard FHA and conventional loans that help homebuyers qualify. The extra flexibility of these programs comes with a few considerations, like requiring the homebuyer to have mortgage insurance, but your Summit Loan Officer can identify ways for you to take advantage of these programs.
Affordable Down Payment Options
FHA home loans require 3.5 percent down while conventional home loans ask for just 3 percent down. And since both loan programs allow sellers to help cover closing costs, they’re perfect for homebuyers looking to minimize upfront costs.
The Choice is Yours
FHA and conventional home loans give homebuyers the option to choose between fixed or adjustable rates and a variety of loan terms for both home purchases and refinances.
Credit History Flexibility
Homebuyers with less-than-perfect credit can still qualify for financing. Both programs let friends or family members help you qualify with gift funds for the down payment and allow for non-occupying borrowers.
Low Down Payment Options Overview:
- Down payments as low as 3.5 percent on FHA loans and 3.0 percent on conventional loans.
- Entire down payment can come from gift funds provided by family members.
- Seller is allowed to provide 3-6 percent of the purchase price to pay for closing costs.
- Perfect credit not required to qualify.
- Fixed- and adjustable-rates available.
- Non-occupying borrowers can help qualify for the loan. On FHA loans, mortgage insurance is required for the life of the loan if your down payment is less than 10 percent. If your down payment is more than 10 percent, the mortgage insurance is removed after 11 years.
- On conventional loans that require PMI, it may be possible to cancel the PMI once enough equity is present.
