Do I have to have a 20% down payment to buy a home?

No. You may not even have to have a down payment at all!

You can borrow more than 80% of the price of the house you are buying. You can actually borrow a lot more.  If you are buying your first home, or haven’t owned a home in three years, you probably qualify for a low-down payment or even no down payment mortgage.

How to get a Zero-Down Mortgage

When you sell a home, you have that money to put down on your next home. But if you are buying your first home and have limited savings, these options will help you.  You can borrow 100% or even more of the home’s purchase price without having to put any money down at closing.

FHA 203(k) Rehabilitation Mortgage 110% or more

A 203(k) loan can be way over 80%. It is a fixer-upper loan. You can borrow money to buy a house that needs work and the money to do the repairs all in one mortgage. You can borrow up to 110% of the value the house will be later, once it is in good condition.

At the closing, part of the money pays the seller for the house. The rest is put into a special account you can draw from to pay for repairs or improvements. You have a single mortgage payment.

You will have to use an FHA-approved licensed contractor or consultant.

Find out more about FHA 203(k) Rehabilitation Mortgage  on the HUD website >

VA Home Loan

If you qualify, veterans and service members can use a VA Home Loan to purchase new or existing homes with no down payment. A 1.25% to 3.3% funding fee is added to the mortgage. That means the loan is for a higher amount than the cost of the house.

Find out more about VA-backed Veterans Home Loans on the VA website >

Fixer-Upper Home Loans 90% to 96.5%

Renovation Mortgages are also available through the Federal Housing Administration, the Department of Veterans Affairs and the government-sponsored, Fannie Mae HomeStyle and Freddie Mac CHOICERenovation.

FHA Loans

You can get an FHA loan with as little as 3.5% down if you have a credit score of 580 or more. If your credit score is at least 500, you can get an FHA loan with 10% down. You will likely have to pay PMI.

Find out more about FHA Mortgage Options on the Federal Housing Administration website >

Private Mortgage insurance (PMI)

Until the amount you owe is less than 80% of the appraised value of your home, a lender may require PMI. Depending on your credit, PMI adds up to 2% of the amount you owe to your house payment each month.

Once you have paid off 80% or so of the loan or your home has increased in value so that what you owe is less than 80% of what the house is worth, you can cancel the PMI insurance.

Fannie Mae and Freddie Mac Renovation Mortgages

Fannie Mae and Freddie Mac Renovation Mortgages can be used for repairs or improvements. The money can be used for any project, including additions and upgrades. You can use any licensed contractor.

You do NOT have to be a first-time homeowner to get a Fannie Mae and Freddie Mac Renovation Mortgage. It can even be used for a second home or a home you will rent out.

Fannie Mae’s HomeStyle Renovation Loan

Borrow up to 75% of what the house will be worth after repairs or improvements.

Find out more about Fannie Mae’s HomeStyle Renovation Mortgage on the FDIC website >

Freddie Mac’s CHOICERenovation Mortgage

Borrow up to 75% of what the house will be worth after repairs or improvements.

Find out more about Freddie Mac’s CHOICERenovation Mortgage on the Freddie Mac website >

Freddie Mac’s CHOICEReno eXPress Mortgage

Borrow up to 85% of what the house will be worth after repairs or improvements.

Find out more about Freddie Mac’s CHOICEReno eXPress Mortgage on the Freddie Mac website >

USDA Home Loans

You don’t have to have a down payment for a USDA Home Loan.

A U.S. Department of Agriculture (USDA) Home Loan is available in some rural areas to buyers who earn $112,450 a year or less. (Larger families can earn up to $148,450 a year.) The hardest part to getting a USDA Home Loan is finding a house in a rural or suburban area that qualifies.

Check out the USDA’s map of eligible areas to find out if homes in your area qualify >

Local Programs

There are also local programs to help you buy a home. The best way to find out what mortgage you qualify for is to talk to a local mortgage broker or real estate agent. Call around and find out who in your area is experienced with the type of loan you hope to qualify for.

The featured image at the top of this page shows newly-completed homes in the Lincoln Park neighborhood of West Greenville, North Carolina. Greenville Housing Division offers numerous programs to help low- to moderate-income buyers and homeowners.

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