Understanding Percent Down

The required down payment percentage varies for VA, FHA, and conventional loans, reflecting their different lending criteria and intended borrowers:

VA Loans: Down Payment: Generally, VA loans do not require a down payment. This is one of the most significant benefits of a VA loan. Eligible veterans, active-duty service members, and some surviving spouses can finance up to 100% of the home's purchase price. Exceptions: In some cases, a down payment may be required if the purchase price of the home exceeds the appraised value or if the loan is above the VA loan limits for the county, though these limits have been eliminated for most borrowers as of 2020.

FHA Loans: Down Payment: FHA loans require a minimum down payment of 3.5% for borrowers with a credit score of 580 or higher. This makes FHA loans an attractive option for borrowers with lower credit scores or limited savings. Higher Down Payment for Lower Credit Scores: For borrowers with credit scores between 500 and 579, FHA requires a 10% down payment.

Conventional Loans: Down Payment: The standard down payment for conventional loans is typically 20%. However, it's possible to find conventional mortgages with down payments as low as 3% to 5%, especially for first-time homebuyers or those purchasing a primary residence.

Private Mortgage Insurance (PMI): For conventional loans with less than 20% down, borrowers usually must pay PMI, which increases the monthly mortgage payment.

The choice between these types of loans and the corresponding down payment will depend on the borrower's eligibility, credit history, financial situation, and the specific requirements of the loan program. It's important to consult with a mortgage professional to understand the best option for your circumstances.