Too Many Buyers Still Think They Need 20% Down and They Don’t!

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Do You HAVE to Put 20% Down to Buy a House?

The NAR 2017 Aspiring Home Buyers Profile report found that 39% of first time home buyers believed they needed more than 20% for a mortgage down payment on a home purchase. This proves that a considerable misconception remains among people who just don’t realize there are several lower down payment options. The average down payment for first time home buyers is just 6% according to the National Association of Realtors.

Fun fact: Since the invention of FHA loans in 1934, mortgages have not required 20% down!

Low Down Payment Options include:

FHA Loans- as little as 3.5% down

VA Loans- 0% down

Mass Housing– as little as 3% down

USDA – 0% down. Only available in certain rural areas

Fannie Mae/Freddie Mac- as little as 3%

As you can see, there are many choices and all buyers should meet with a qualified mortgage broker early in their home buying process to review all options and decide what the best fit is for them.

Some reading this may think mortgage companies are loosening standards too much again but that is also not true. As of January 2018, these are the average FICO credit scores for recently approved home loans.

FHA: 686

VA: 708

The chart below shows the percentage of FHA  loans approved for each range of credit scores.
















We are by no means suggesting a higher down payment is an inferior choice. In fact, it is a great option since the more you put down, the greater amount of equity you have and the lower your monthly payment is.  Just keep in mind this is not a requirement to buy. Every year millions of homes are sold to consumers who choose low down payment options and they work out really well for most people.

Source: The Mortgage Reports, Ruby Home
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