A common misconception about home buying is that you’ll need to have a hefty down payment to become a homeowner. Quite the opposite is true – there are so many mortgage programs out there that aim to help make homeownership an attainable feat for all. Putting 20% down isn’t the best course of action for everyone – it truly comes down to your specific financial situation and savings. If you are seriously considering buying a home and aren’t sure if putting 20% down is in the cards, keep reading to learn about a few mortgage options that require less cash on hand.

Why 20% Down?

The first thing you should know is how does this 20% down payment play into the mortgage loan and why do so many people think it’s a requirement. There is a multitude of other loan programs that we’ll discuss below that require just a fraction of 20% down (some even require no down payment!). Putting less than 20% down may require you to pay some form of mortgage insurance in most cases, which will be rolled into your monthly mortgage payment. But, if you’re financially unable to put a full 20% down at one time, paying a little bit more each month in the form of mortgage insurance can be your ticket to homeownership.

How to Buy a Home with Less Than 20% Down

Now that we’ve established you can purchase a home without a huge down payment, let’s discuss some specific loan programs that can make homeownership achievable with less cash out of pocket.

Conventional Loan

Did you know you can take out a conventional mortgage with as little as 3% down? It’s true! The key factor here is that you may need to have above-average credit and a strong financial background. Like other programs, there is an upper loan limit for conventional mortgages – that amount is currently sitting at $548,250. Also, the 3% down payment can be gifted to you by a relative if you have a loved one offering to contribute toward your home purchase.

FHA Loan

An FHA loan is backed by the Federal Housing Administration and allows you to put as little as 3.5% down on a home purchase. FHA loans are a great option for first-time buyers, a group that makes up over one-third of all homebuyers, according to the National Association of Realtors. One of the biggest benefits of an FHA loan is that the credit score requirements are less stringent than those of a conventional loan, making it easier for younger buyers with little credit history to achieve their dream of homeownership.

VA Loan 

For veterans, active-duty military, and their spouses, a VA loan is a flexible option that allows for as little as 0% down. This program is backed by the Department of Veterans Affairs and allows qualified veterans to apply and be approved for a mortgage with no down payment. A VA loan also has no monthly mortgage insurance, unlike some other low down payment programs.


The USDA loan program is geared toward buyers in areas deemed ‘rural’ by the US Department of Agriculture and requires 0% down. It’s worth noting that some suburban areas qualify for this type of mortgage; it’s a good idea to consult the eligibility zones when you’re starting your home search to see if the USDA loan may be an option for you. There are income thresholds that you can’t exceed for this type of loan, so you’ll want to discuss the specifics with your lender.  

State Housing Finance Agency Options

In addition to the mortgage programs above, some state housing finance agencies offer programs that help make homeownership an affordable reality for buyers. In our region, the Virginia Housing and Maryland Mortgage Program offer programs to help local homebuyers achieve their dream of homeownership. Contact us to learn more.

 At C&F Mortgage, our local industry experts are focused on you every step of the way and will help you make an informed mortgage decision based on your specific financial needs. Get in touch with us today to begin your journey to homeownership!

The information contained herein (including but not limited to any description of C&F Mortgage Corporation and its lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. Restrictions apply. This is an advertisement and not a commitment to lend. C&F Mortgage Corporation NMLS# 147312 Equal Housing Lender.
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