How To Buy A Home With Less Than 20 Percent Down

With today’s home prices around the country, saving up for a 20 percent down payment—historically the standard down payment for a home—can be a virtual impossibility.

Here are some of the best ways to buy a home with a down payment of less than 20 percent. 

The Ins and Outs of Private Mortgage Insurance (PMI)

Conventional mortgage lenders will extend home loans to qualified borrowers who are putting less than 20 percent down, but these borrowers must pay for private mortgage insurance (PMI) to cover their loan.  

Government-Backed Mortgages

Government-backed mortgages are loans insured by agencies of the federal government. These mortgages offer the advantage of requiring down payments of 3.5 percent or less, making them far more accessible than conventional loans.  

Home Buyers: Enlist Uncle Sam’s Help

Borrowers with a FICO score above 580 can qualify for an FHA loan with a down payment of just 3.5 percent. But potential borrowers with average or below-average credit can qualify, too.  

20 Percent Down: A Thing of the Past?

While home buyers no longer need to make a down payment of 20 percent to buy a home, it’s important to note that putting money down can provide a lot of savings.  

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