Homeownership in Columbus, Ohio: Do You Really Need 20% Down?

Do You Really Need a 20% Down Payment to Buy a Home?

You've probably heard it a million times: "You need 20% down to buy a house." For many people, that number feels like a giant roadblock on the path to homeownership. What if we told you that's not always the case? Let's bust some myths and explore some of the exciting down payment options available today! 🏡

The 20% Myth: Where Does It Come From?

The idea of a 20% down payment is traditional, and for good reason! Putting down 20% or more often means you won't have to pay for private mortgage insurance (PMI). While avoiding PMI is a great benefit, it's not a requirement for most home buyers. The truth is, there are a variety of loan programs designed to make homeownership a reality for those who can't put down a large chunk of cash upfront.

Diving Deeper into Down Payment Options!

Here are a few popular loan types that offer low or even zero down payment options:

FHA Loans (Federal Housing Administration)

This is a very popular option, especially for first-time home buyers! An FHA loan allows you to buy a home with a down payment as low as 3.5%. The trade-off is that you'll pay a mortgage insurance premium (MIP), but for many, it's a small price to pay to get into their dream home sooner!

VA Loans (Veterans Affairs)

If you are a military member, veteran, or an eligible spouse, a VA loan is an incredible benefit! This program offers the amazing advantage of a 0% down payment and doesn't require private mortgage insurance. It's a fantastic way to honor and thank those who have served. VA loans do have a funding fee, but it can often be rolled into the loan itself.

USDA Loans (U.S. Department of Agriculture)

This program is designed to help low-to-moderate-income buyers purchase homes in eligible rural and suburban areas. Qualified buyers can get a loan with 0% down! It’s a wonderful way to open up homeownership opportunities outside of major cities, and the property's location and the buyer's income must meet specific guidelines.

Conventional Loans

Conventional loans are the most common type of home loan, and they are incredibly flexible! While the traditional wisdom of putting down 20% to avoid private mortgage insurance (PMI) still applies, you can get a conventional loan with a down payment as low as 3%. This is a great option for people who have a good credit score and are looking for flexible terms.

Low Down Payment, High Possibilities!

The journey to buying a home is filled with so many possibilities, and a low down payment is just one of the ways to make it happen! The most important step is to understand all of your options and find the perfect fit for your unique situation.