No, you DO NOT need to put 20% down to finance a new home.
There are a number of mortgage programs that allow you to put down much less and even $0, including:
- FHA loans: FHA loans require a down payment as little as 3.5%. However, there are FHA loan limits determined by location. Ask us about all of our available Hughston Homes that are under FHA loan limits!
- VA loans: VA loans DO NOT require a down payment for eligible borrowers. However, there are other eligibility requirements for VA loans, such as having served in the military. Ask us about all of our available Hughston Homes near military bases across Georgia and Alabama!
- USDA loans: USDA loans require a down payment as little as 0%. However, USDA loans are only available in certain rural areas and there are income limits determined by # of people in household. Ask us about all of our available Hughston Homes in USDA Financing Territory!
- Conventional loans: If you put down less than 20% on a conventional loan, you will be required to purchase private mortgage insurance (PMI). PMI is a type of insurance that protects the lender if you default on your mortgage. PMI can add to your monthly mortgage payment, so it’s important to factor that into your budget.
Here are some factors to consider when deciding how much to put down on a home:
Your financial situation:
- How much money do you have saved for a down payment?
- What is your current debt and expenses? Would you benefit using the money you have saved to pay down the debt and raise your credit score instead of putting down a larger down payment? (Our trusted lenders can go over this with you.)
Your desired monthly mortgage payment:
- How much can you afford to pay each month for your mortgage?
Your long-term goals:
- Do you plan to stay in your new home for a long time? If so, a lower down payment may be a good option, as you will have more equity in the home over time.