Since 2011 the housing market in the United States has shown modest gains and buyers are more confident than they were a decade earlier. Lower mortgage rates are allowing buyers to be able to afford to own a home.

With needing about 20% of the home’s purchase price on top of the loan for closing costs, a lot of first-time buyers don’t have the additional cash to make the down payment.  Those that currently own homes and want to sell aren’t getting enough equity to be able to afford the down payment either.  Government loans through the FHA and VA allow for these homebuyers to have options that can work for them.

Conventional loans

Conventional loans require at least 20% down, no matter the cost of the home.

First-time buyers

First-time home buyers can obtain a mortgage with a 3.5-5% down payment requirement.

FHA Loans

According to

“Your down payment can be as low as 3.5 percent of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.”

“Many borrowers find there are additional factors that affect the amount of the down payment. For example, those who do not qualify for the most competitive loan terms may not be able to get the lowest required down payment. Credit issues or other factors may affect the lender’s perception of your credit worthiness. That can affect the terms, rates and down payment you’re qualified for from that particular lender.”

VA mortgage = 0% down payment

Military borrowers can apply for a VA loan which is insured by the U.S. Department of Veterans Affairs. Those who are active-duty, honorably discharged service personnel, have spent at least 6 years in the Reserves or National Guard or spouses of service members killed in the line of duty are eligible for this type of loan.

This loan program takes into consideration intermittent occupancy, which allows for deployment issues, and it does not automatically disqualify those who have filed for bankruptcy or had other credit issues.

Mortgage insurance

If you’re able to make a 20% down payment, you will not have to pay private mortgage insurance each month. PMI insures the lender for the amount of loan-to-value above 80 percent. PMI insurance is automatically added to your mortgage payment monthly.

Condos mean more down

Mortgage lenders see condominiums as higher risk than detached single-family homes because of the complicated ownership factors associated with them.  Because of this, buyers looking to purchase a condo will need to put down at least 10% in order to secure their loan.