Can I Buy Real Estate With Less Than 20% Down?
August 29th, 2008 By Peter G. Miller
While so-called “conventional” loans do require 20 percent, other loan programs do not. As examples:
- • Qualified individuals can buy with nothing down under the VA loan program.
- • FHA loan programs require 3.5 percent down — and maybe less with some state assistance programs.
- • The “Affordable Gold” and “Community Home Buyers Program” each require 5 percent down or less.
- • State programs for first-time buyers routinely require 5 percent down or less, sometimes just 1 to 3 percent down.
- • Loans with little nothing down were widely available from traditional loan sources during the toxic loan years — but to a large extent, not now.
- • Loans greater than the sale value of the property, say 110% financing, have been available in recent years. Such financing is NOT recommended because it represents too much risk — to both borrowers and lenders. Happily it is not generally available any longer.
Remember that in addition to down payment money, you may also need funds for closing, reserves, moving and other costs. Also, “seller contributions” can help you off-set cash needs at closing.
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