Mortgage Basics FAQ
Are low down payment options available for buyers who can't afford a 20% down payment?
2. Are low down payment options available for buyers who can't afford a 20% down payment?
Although loans were widely available to people putting less than 20% down during the real estate boom of the late 1990s and early 2000s, lenders have since become much more cautious. Even if you can afford high monthly mortgage payments and have a high credit score, you may have trouble finding loans requiring as little as 5% to 15% down -- and the loan you find will likely require you to pay a much higher interest rate and more points than if you'd made a larger down payment.
The exception are FHA-insured loans, which make provision for buyers with lower than optimal credit scores and unable to make down payments. More and more homebuyers are using these -- but you need to meet separate qualification criteria. See an experienced mortgage broker for help.
Also, if you put down less than 20% or use an FHA-backed loan, you will likely have to pay for private mortgage insurance (PMI).