Buying a Home with Less Than a 20 Percent Down Payment

Yes, it is possible to buy a home with less than a 20% down payment. Government-backed loans, such as Federal Housing Administration (FHA) loans and Veterans Affairs (VA) loans, have lower down payment requirements and more flexible credit standards. You can also buy a home using a combination of a mortgage and a home equity loan.

Buying a home with a regular mortgage and a home equity loan can be a good option for those who don’t qualify for any of the government programs listed above.

Using a combination of a mortgage and a home equity loan can help you finance the purchase of a home, but it also means you’ll have two separate payments to make each month, which can be more challenging.

Loan Type

Purchase Refinance with Cash out Refinance

State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

FICO Score

Superior (780-850) Exceptional (760-779) Excellent (740-759) Very Good (720-739) Good (700-719) Above Average (680-699) Average (660-679) Fair (640-659) Need Improvement (620-639) Poor (350-620)

Loan Amount

$

Points

Up to 0 points Up to 0.5 points Up to 1 points Up to 1.5 points Up to 2 points Up to 2.5 points Up to 3 points

LTV

%

Loan Term

 15-Year Fixed  20-Year Fixed  30-Year Fixed  5-Year ARM  7-Year ARM  10-Year ARM

Show Advertiser Disclosure

The lenders whose rates and other terms appear on this chart are ICB's advertising partners. They provide their rate information to our data partner RateUpdate.com. Unless adjusted by the consumer, advertisers are sorted by APR from lowest to highest. For any advertising partners that do not provide their rate they are listed in advertisement display units at the bottom of the chart. Advertising partners may not pay to improve the frequency priority or prominence of their display. The interest rates, annual percentage rates and other terms advertised here are estimates provided by those advertising partners based on the information you entered above and do not bind. Any lender Monthly payment amounts stated do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Although our data partner RateUpdate.com collects the information from the financial institutions themselves, the accuracy of the data cannot be guaranteed. Rates may change without notice and can change intraday. Some of the information contained in the rate tables including but not limited to special marketing notes is provided directly by the lenders. Please verify the rates and offers before applying for a loan with the financial institution themselves. No rate is binding until locked by a lender.

Lender

APR / Rate

Fees / Points

Payment

NMLS #1025894

5.539%

15-Year Fixed

5.375%

$4,284

Includes 0.896 points for $3,584

Lender Fees: $700

$3,242 /mo

Next >

NMLS #6606

5.762%

15-Year Fixed

5.625%

$3,548

Includes 0.887 points for $3,548

Lender Fees: $0

$3,295 /mo

Next >

NMLS #1025894

6.580%

30-Year Fixed

6.490%

$3,772

Includes 0.768 points for $3,072

Lender Fees: $700

$2,526 /mo

Next >

NMLS #401822

6.644%

30-Year Fixed

6.500%

$5,995

Includes 1.000 points for $4,000

Lender Fees: $1,995

$2,529 /mo

Next >

NMLS #399799

6.708%

30-Year Fixed

6.625%

$3,608

Includes 0.570 points for $2,280

Lender Fees: $1,328

$2,562 /mo

Next >

NMLS #6606

6.719%

30-Year Fixed

6.625%

$3,892

Includes 0.973 points for $3,892

Lender Fees: $0

$2,562 /mo

Next >

NMLS #401822

7.577%

15-Year Fixed

7.375%

$4,995

Includes 0.750 points for $3,000

Lender Fees: $1,995

$3,680 /mo

Next >

Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes and insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and product details.

It is important to carefully consider your budget and ability to make both payments before deciding to use this option. Your lender also has metrics they use to make sure you can make these payments.

It is always advisable to consult with a mortgage broker to find out how much you qualify for before staring the home search.

These Steps Will Help You Buy a Home with Less than a 20 Percent Down Payment

1. Know your budget: Before you start house hunting, it’s important to determine how much you can afford to spend on a home. This includes not just the monthly mortgage payment, but also insurance, property taxes, and other costs. Use an online mortgage calculator to estimate your monthly payments based on the home price and interest rate.
2. Save for a down payment: The larger the down payment, the lower the monthly mortgage payments and interest rate. Even a small increase in down payment can have a significant impact on your monthly budget. Start by creating a budget and cutting back on unnecessary expenses. You can also look into grants and assistance programs offered by government agencies and non-profit organizations.
3. Improve your credit score: A higher credit score can result in a lower interest rate and better loan terms. Review your credit report for errors and take steps to improve your score, such as paying bills on time, reducing debt, and limiting new credit applications.
4. Get pre-approved for a mortgage: Before you start looking at homes, get pre-approved for a mortgage. This will give you an idea of how much you can borrow and what your monthly payments will be. A pre-approval also makes you a more attractive buyer to sellers and can help you close the deal faster.
5. Consider a government-backed loan: If you have a low-down payment, consider a government-backed loan, such as a Federal Housing Administration (FHA) loan or a Veterans Affairs (VA) loan. These loans have lower down payment requirements and more flexible credit standards.
6. Shop around for a lender: Different lenders offer different rates and fees, so it pays to shop around. Get quotes from several lenders, compare the terms, and choose the one that offers the best deal. You can easily search for current mortgage rates online from many lenders.
7. Be realistic: Don't fall in love with a house that you cannot afford. Be realistic about what you can afford and look for a home that fits your budget. Remember to also factor in costs such as insurance, property taxes, and maintenance expenses.
8. Work with a licensed real estate agent: A good real estate agent can help you find the right home and negotiate the best price. They can also guide you through the process and help you avoid common mistakes.

In conclusion, buying a home with less than a 20% down payment requires careful planning and preparation. By saving for a down payment, improving your credit score, getting pre-approved for a mortgage, and working with a real estate agent, you can make your dream of homeownership a reality. Remember to be realistic about what you can afford and take your time to find the right home for you.