What it is
The 20%-down rule is a convention, not a requirement. Conventional loans go to 3% down for eligible buyers, FHA to 3.5%, and VA and USDA to zero for those who qualify.
Which program fits depends on military service, the property location, credit, and how long you plan to hold the home. The differences that matter most are in the mortgage insurance: conventional PMI cancels on a defined schedule, FHA annual premiums often do not, and VA has no monthly insurance at all.
Putting less down and keeping cash in reserve is sometimes the better call, particularly on an older home. A loan officer can price both versions so the trade-off is visible instead of theoretical.
Who it fits
- Buyers with limited savings but stable income
- Renters considering a purchase
- Buyers eligible for VA, USDA, or down payment assistance programs
- Conventional buyers willing to carry PMI for a period
How it runs
- 1Eligibility CheckWe screen your scenario against each low-down program, including local assistance.
- 2Compare OptionsSide-by-side payment and total-cost comparisons, including the mortgage insurance on each.
- 3Pre-ApproveA pre-approval letter for the program you select.
- 4CloseA standard purchase timeline, typically 30 to 45 days from contract.
Questions
Should I save longer for a bigger down payment?
It depends on what home prices and rates do while you save, which nobody knows in advance. The honest version: a larger down payment lowers the payment and can avoid mortgage insurance, while buying sooner starts amortization sooner. Run both.
Does PMI go away?
On a conventional loan, yes. Under the Homeowners Protection Act (12 U.S.C. §4902) you may request cancellation when the balance is scheduled to reach 80% of the original value, and the servicer must terminate it automatically at 78%. Both dates come off the original amortization schedule, so extra payments do not move the automatic date. There is also a final termination at the midpoint of the amortization schedule. FHA annual mortgage insurance does not cancel this way.
Are gift funds allowed?
Yes on most low-down programs, provided the gift is documented with a letter and a paper trail showing the transfer.
What about closing costs?
Closing costs are separate from the down payment. Seller credits, lender credits, and some assistance programs can cover part or all of them.
Other programmes
Fixed Rate Mortgage
A predictable rate and payment for the life of the loan.
FHA Home Loan
Government-insured loans with 3.5% down and flexible credit guidelines.
VA Home Loan
$0 down, no monthly mortgage insurance, reusable entitlement.
Rehab Loan
Finance the purchase and renovation of a home in a single mortgage.
USDA Loan
0% down loans for eligible rural and suburban homes.
Jumbo Home Loan
Financing for homes priced above the conforming loan limit.