Some people believe you need to put a 20% down payment on a house. There are programs that allow you to put down far less. In addition, a large down payment does not necessarily equal a lower monthly mortgage payment because your payment is based on additional variables such as interest rate and the length of your loan.

Here’s a list of different tips on how you can lower that down payment.

VA Loan or USDA Loan

If you are a veteran or active military, you may qualify for a VA loan which can allow you to put as little as 0% down. USDA loans exist for rural and suburban areas, also allowing a 0% down payment if you are planning to purchase or refinance a property in a USDA eligible zone.

PMI, or Private Mortgage Insurance

If you don’t put down 20% on a home, you will typically be required to pay private mortgage insurance along with your mortgage and property tax. It goes away once your loan-to-value reaches the 78% threshold. 

Lender Credits

Lender credits may be used to cover closing costs. However, if you use them to lower your interest rate, you may save thousands in the long run. 

Seller Credits

Sometimes, you can request that your seller help you out by asking for a credit towards closing costs. If closing costs are covered, any remaining funds can be used towards paying homeowner’s insurance fees which will reduce the down payment.

Arc Home’s loan agents can help you assess your options. Give us a call today and let’s work on lowering that down payment!