The Fine Details on Down Payment
August 6th, 2014
I read an interesting study that half of Millennial homebuyers plan to ask their parents to help with the down payment. Whether you are a 20-something or a bit older, many people might not know the various down payment requirements.
Here's the breakdown:
VA Loan (Veterans Administration) -- available to military personnel and veterans.
Only used for a primary residence. There's a 0% down payment as long as the value of the house is below a certain threshold (based on the city where it's located). For most of Hampton Roads, the limit is $458,850. For more on VA Loan limits, read this.
FHA Loan (Federal Housing Administration) -- available to the general public.
Only used for a primary residence and requires a 3.5% down payment.
Conventional Loan -- available to the general public.
Can be used for primary residence, second home or investment property.
Some lenders will accept as little as a 3% down payment (with monthly mortgage insurance) depending on the occupancy, credit scores, etc.
To avoid PMI (what's PMI?), you need to put down 20%, but make sure you speak to your lender about different loan requirements.
Mortgage Banker, NMLS# 1114873