One of the biggest myths I hear is that you need a 20% down payment to buy a home. The truth is, many buyers don’t.
Depending on the loan program and your qualifications, you may be able to buy a home with a much smaller down payment than you think.
Before you spend years trying to save 20%, let’s talk about your options. You may be closer to buying a home than you realize
What Down Payment Do I Need?
The amount you need for a down payment depends on the type of loan you’re using and your individual situation.
Here are some common examples:
- Conventional loans may require as little as 3% down for qualified buyers.
- FHA loans require 3.5% down if you qualify.
- VA loans may offer 100% financing for eligible veterans.
- USDA loans may also offer 100% financing in eligible rural areas.
The minimum down payment required isn’t the same for every homebuyer. Choosing the right loan program depends on factors such as your credit profile, available funds, property type, and long-term financial goals. Reviewing your options before making an offer can help you determine which program best fits your situation.
Can I Use Gift Money?
In many cases, yes.
Depending on the loan program, family members may be able to help with your down payment or closing costs by providing gift funds.
If you’re considering using gift money, I’ll explain exactly what documentation is required and how the process works.
Can the Seller Help With My Closing Costs?
Yes, in many cases they can.
Depending on the loan program and the terms of your purchase contract, the seller may be able to contribute toward some or all of your closing costs.
Every loan program has different limits, so I’ll explain what’s allowed based on your situation.
Many buyers are surprised to learn they don’t always have to pay every closing cost out of pocket.
Down Payment Assistance Programs
Don’t assume you need to save your entire down payment on your own. Several Ohio programs, including those offered through the Ohio Housing Finance Agency (OHFA), may provide eligible homebuyers with assistance for their down payment and, in some cases, closing costs. Depending on the program, qualified borrowers may receive assistance of up to 3.5% of the home’s purchase price.