Mortgage Goals: How Much Do I Need for a Down Payment to Buy a House?

Posted by Laine Smith on 12/4/14 5:13 PM

Topics: Home Buying

A large amount of homebuyers cite saving funds for a down payment as their biggest hurdle in the home buying process. Contrary to popular belief, the need for a 20 percent down payment to purchase a home is no longer the status quo. 


The amount you will need to pay upfront on your home purchase depends heavily on the loan program you qualify for, as well as your credit score, credit history, income, and debts. Typically, homebuyers will need to save some funds for a down payment, but there are programs that require no down payments.

Down Payment Options

USDA Rural Development Guaranteed Housing Loan – funded by the United States Department of Agriculture, this loan program requires no down payment and provides 100 percent financing for eligible homebuyers.
FHA Loan – insured by the Federal Housing Administration, FHA loans are often referred to as a “first-time homebuyer loans” because of the low, 3.5% down payment requirement though it is offered to both first-time and repeat homebuyers.
VA Loan – the VA-guaranteed loan is available to eligible servicemen and women, allowing them to purchase a home with no down payment required.
Conventional Loan – homebuyers choosing to finance with a conventional loan must put down a minimum of 3 percent of the home’s purchase price.

Down Payment Assistance

If the home loan you qualify for does require a down payment and you are lacking in funds, there are options. Conventional and FHA loans allow cash gifts from family members to cover down payment costs. There are a wide variety of down payment assistance programs available, as well, through the Illinois Housing Development Authority and Iowa Finance Authority, including:

  • IHDA SmartMove – offers first-time homebuyers up to $6,000 for down payment.
  • IHDA SmartMove Trio - offers first-time homebuyers up to $6,000 for down payment as well as a Mortgage Credit Certificate (MCC) which reduce income taxes by an amount equal to 20% of the interest paid on a mortgage each year.
  • Welcome Home Heroes – provides $10,000 cash assistance to cover down payment for men and women who honorably served in our armed forces.  Eligible for a MCC as well. 
  • IFA FirstHome Plus – provides up to $2,500 in closing cost and down payment assistance.

If you are curious about your down payment options on your home purchase, contact one of our mortgage bankers. For more information regarding the homebuying experience, download our free Mortgage 101 Handbook for all of your home buying and financing questions.

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