What are the minimum down payment requirements?


The minimum down payment requirements vary by lender, mortgage program, loan amount, borrower income and credit rating.

The minimum down payment required from borrowers to avoid paying mortgage insurance is 20%. However, there are many loan programs requiring much lower or even no down payment - FHA and VA loans; 95%, 100% and 103% financing loans; and many others developed to assist homeownership for low and average income borrowers or target areas.

There are many ways to satisfy the down payment requirements:

  • using down payment assistance programs;
  • government subsidized grants;
  • using a second mortgage in a combo loan;
  • gift funds from relatives and friends;
  • using 401k for a down payment, or borrowing against the 401k;
  • liquidating stocks and bonds, etc.

The best way to cover the minimum down payment requirements when buying a home is to do a research for any special mortgage loans and down payment assistance programs and grants you could qualify for - the best thing is you will be eligible for down payment and closing cost funds that you won't have to repay. This way, you won't be exhausting your long-term assets, nor borrowing funds from relatives, or draining your 401k, or having to repay a second mortgage.


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