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Strategies for Handling Mortgage Down Payments

strategies mortgage down payments

For anyone looking into a mortgage loan, the down payment will be a significant consideration. Referring to the amount of money you put down up front on a given home purchase, the down payment has a big impact on several areas of the home loan, from the mortgage rates you can receive to the total interest you’ll pay over the life of the loan.

At Primary Residential Mortgage, we have a variety of loan programs to help you get the best mortgage rate and overall deal possible. The “magic number” of sorts with down payments has become 20 percent over the years – but it’s important to realize that not every home purchase comes with this amount put down. There are several ways you can get the home of your dreams even if you don’t have 20 percent of the purchase price available for the down payment. Here are a few distinct options at your disposal if this is a concern for you.

Loan Programs

For starters, several of the loan programs we offer come with situations where down payments far lower than the 20 percent number are allowed. Here are a few examples:

  • FHA loans: Backed by the Federal Housing Administration, these are loans designed for first-time homebuyers and others without the ability to make a large down payment. For those with a credit score of at least 580, the FHA program offers 3.5 percent down payments. Even those with a lower range, down to 500, can get 10 percent down payment options, making this one of the most popular loan formats out there.
  • VA loans: Available for military service members and their families, these are high-quality loans that often come with no down payment whatsoever, plus no mortgage insurance required.
  • USDA loans: Available for farmers and other agricultural industries, these loans can also help borrowers fund mortgages without any down payment, so long as their credit score is over 640.
  • Conventional loans: Finally, even some conventional loan programs – the ones typically known for their 20 percent requirement – can come with relaxed standards. These will range from five to 20 percent depending on your credit and other factors, and there are even Conventional 97 loan programs that drop down payments into the 3 percent range.

Grants or Other Fund Methods

Now, loan programs aren’t the only resources at your disposal when it comes to down payment funding. A couple other options:

  • Grants: Most of the programs above accept financial assistance from sources like state grants, and many will also take community lending program funds.
  • Gifts: In addition, any financial gifts you receive from family members can be used in full toward a down payment.

For more on how you can improve your ability to meet down payment requirements on a mortgage, or for information on any of our mortgage services, speak to the staff at Primary Residential Mortgage today.

*PRMI NMLS 3094. PRMI is an Equal Housing Lender. Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. Programs, rates, terms, and conditions are subject to change and are subject to borrower(s) qualification. This is not a commitment to lend. Opinions expressed are solely my own and do not express the views of my employer.

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