Don’t Have 20% to Put Down? Here are Your Options

Man pulling out an empty pocket

It’s an age-old myth that buyers need to put 20 percent down in order to own a home. In fact, many of today’s most popular lending programs require only a mere 3 to 3.5 percent up front. Some programs even waive down payments altogether.

Are you worried you don’t have enough saved up to make a hefty down payment? Don’t fret. It doesn’t preclude you from buying a home—nor will it make homeownership completely unaffordable.

Just consider these low- or no-down payment options instead:

  • An FHA loanFHA loans require only a 3.5 percent down payment. On a $200,000 home, that’s just $7K. The only catch? You’ll need a 580 credit score or higher.
  • A VA loan – Are you or someone in your household a former military member? Then try a VA loan, which requires absolutely zero down. VA loans also cover many closing costs, which can save you even more in the long run.
  • Fannie Mae & Freddie Mac loans – Both Fannie Mae and Freddie Mac offer low-down payment options. Try the Home Possible Advantage loan (3 percent down) from Freddie or the Conventional 97 from Fannie.
  • Down payment assistance programs – There are dozens of programs out there designed to encourage homeownership by assisting with down payment funding. Check your city, county and state, or look into local non-profit organizations in your area.

Other options:

  • Have high student debt? If your student loan debts are keeping you from saving up for that down payment, look to Fannie Mae. The lender recently introduced new policies that let you exclude student debt in certain situations or even use your debt payments to prove credit-worthiness.
  • Buying in a rural area? If you’re buying a home outside the city limits, you may be able to qualify for a USDA loan, which requires zero down payment whatsoever.

Don’t let those myths fool you. Remember, if you don’t have 20 percent to put down, buying a home is still possible. In fact, most buyers put down just 6 to 7 percent on average.

Having a rainy day fund is important as a homeowner, so don’t empty your savings account in order to up your down payment. Keep a financial safety net in place, and work with your lender to find a happy medium. You’ll be glad you did.

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By Aly Yale / April 19th, 2018 / Categories: / Tags:

Aly Yale

Aly J. Yale is a freelance writer focusing on real estate, mortgage, and the housing market. Her work has been featured in Forbes, Bankrate, The Motley Fool, Business Insider, The Balance, and more. Prior to freelancing, she served as an editor and reporter for The Dallas Morning News. She graduated from Texas Christian University's Bob Schieffer College of Communication with a major in radio-TV-film and news-editorial journalism. Connect with her at or on Twitter at @AlyJwriter.