September 25, 2020

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Do You Need Down Payment Help?

Do You Need Down Payment Help?

Saving for your down payment early is a great idea, and doing so can be easier when you have a clear goal in mind. But how much IS that down payment and when should I start doing the math?

Some people are intimidated by the idea of saving up for and making the down payment. Even those who are disciplined and used to cutting corners for a bigger goal can need some outside help to find the down payment money down needed to buy a home.

FHA Loans = Lower Money Down

FHA mortgages have lower down payment requirements than conventional loans, especially if you want to avoid Private Mortgage Insurance on a conventional mortgage (20% is usually required in such cases).

State agencies and other entities operating at the local level often offer down payment grants (and sometimes loans) to qualified borrowers. First-time home buyers have the widest range of options open to them from these agencies, even those who may be seeking a construction loan (depending on circumstances) may have down payment assistance options.

Ask Your Loan Officer

One important aspect to remember about construction loans is that you should check with the lender first to see if down payment help is permitted with those mortgages.

Some lenders may not permit down payment assistance on construction loans.

Do you need a centralized resource to help locate down payment assistance programs near you?

FHA loan rules have specific requirements for down payment help. You cannot be expected to repay a “gift” for it to qualify and your lender will need proper documentation as to the sourcing of the money and how it changes hands before closing day.

Seller Contributions, But Not For Money Down

FHA loan rules also let your seller contribute a limited amount (six percent of the sale price) toward closing costs. This money cannot be used toward your down payment.

Regardless, assistance with closing costs frees up money for you to use on your down payment.

Some people begin looking for homes and down payment programs without doing much homework in advance, but you will definitely want to calculate a rough price range the home you want to buy.

You can use an online mortgage calculator to estimate your down payment and monthly mortgage obligation.

Joe Wallace - Staff Writer

By Joe Wallace

February 11, 2020

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for for (8) years and is currently the Associate Editor for

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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