A large amount of first-time homebuyers cite saving funds for a down payment and closing costs as their biggest hurdle in the homebuying process. Contrary to popular belief, the need for a 20 percent down payment to purchase a home is no longer the status quo.
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The amount you need to put down on your home purchase is heavily dependent on the loan program you choose and qualify for. Other contributing factors include credit score, income and debts.
Typically homebuyers will need to save some funds for a down payment, but there are programs that require no upfront funds. Here is a general list of low down payment loan programs:
- USDA Rural Development Loan - requires no down payment and provides 100% financing for eligible homebuyers.
- VA Loan - requires no down payment and provides 100% financing to eligible veterans and service members.
- FHA Loan - often referred to as a "first-time homebuyer loan" because of the low 3.5% down payment requirement, though it is available to both first-time and repeat homebuyers.
- MyCommunityMortgage - this Fannie Mae conventional loan allots low to moderate income homebuyers with affordable financing and only requires a 3% down payment minimum.
- IHDA FirstHomeIllinois - is available to qualified first-time homebuyers and grants $7,500 in forgivable down payment and/or closing cost assistance.
- Conventional loan - this standard form of home financing allows homebuyers to purchase a home with as little as 3% down.
If you're curious about what loan options and down payment requirements you may qualify for, contact one of our mortgage bankers or fill out the pre-approval form below.
For more information about buying and financing your first home, download our Mortgage 101 Handbook, a great resource for everything you need to know about homeownership.