When the financial advice website NerdWallet surveyed home buyers in 2019, they learned that almost two-thirds of them (62%) thought they needed at least a 20% down payment to buy a home. That’s not true, especially if you’re a first-time homebuyer. NerdWallet’s survey found that the average down payment for first-time homebuyers in 2019 was 7%, and among all buyers, the average rose to 16%.
What kinds of home mortgages require less than a 20% down payment?
FHA Home Mortgages: FHA home loans start with a minimum of 3.5% down payment. 30 year fixed rate FHA loans also have more flexible standards for credit scores than other loan programs. USDA loans also don’t require down payments and can offer mortgages in USDA-qualified areas.
VA Home Mortgages: VA loans require no down payment for eligible veterans. You can get a 30-year fixed-rate VA mortgage or a 15-year fixed-rate VA mortgage with no money down. As of January 1, 2020, the VA lifted county loan limits, so you can get a no money down VA home mortgage in any amount you’re qualified to receive.
Conventional home mortgages: Conventional mortgages can offer down payments as low as 3% and potentially lower. Some mortgage lenders offer down payment assistance grants, especially for first-time and non-traditional home buyers.
How much should you save for a California home mortgage down payment?
You can use a mortgage calculator to see how much your payments will be with different down payment amounts. Save as much as you can, but as we’ve already said, you don’t have to save 20% for the down payment. As you save, keep in mind you will need to pay for other costs when you close your loan. You may also need to pay for mortgage insurance with a lower down payment.
You have many options for your mortgage and more flexibility in home buying and loan choice than a lot of online advice articles show. This is another reason you should work with an experienced California mortgage specialist who can help you plan to get a loan with a down payment you can afford along with monthly payments that help you meet your home buying and financial goals.
Sources
It turns out LA Times has had “20% down payment is dead” articles for 3-4 years – here is another one with the same headline:
https://www.nerdwallet.com/blog/mortgages/20-percent-mortgage-down-payment-dead/
