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The 20% Down Myth

The 20% Down Myth

If you’re desperate to own a home of your own, you are likely saving up until you have 20% of your dream home’s total value. All that’s great, but the fact is you don’t need to put down 20%. 

The 20% myth is leftover from the era after the housing crisis, when many lenders tightened their lending parameters for a while. In fact, since FHA loans were introduced in 1934, mortgages have not required putting 20% down.

Let’s explore loan options that don’t require 20% down.
 

100% Mortgage:

Gulf Winds offers a mortgage option that will finance 100% of your new home’s purchase price. All you need to provide is 1% of closing costs.
 

VA Mortgage:

VA mortgages are the most forgiving, but are strictly for current and former military members. They require zero down and don’t necessitate mortgage insurance. 
 

Conventional Mortgage:

  • 3% down mortgage: Many lenders will require putting as little as 3% down. Some even offer reduced mortgage insurance on these loans, with no income limits or first-time buyer requirements.
  • 5% down mortgage: Lots of lenders accept a 5% down payment. However, most require the buyer to have a FICO score of 680 or higher.
  • 10% down mortgage: Most lenders will accept a 10% down payment, even with a less-than-ideal credit score.
     

Each of these loans requires income eligibility and most necessitate paying for PMI, or private mortgage insurance.

Before house-hunting, be sure you can afford to own a home. Ideally, your total monthly housing costs should amount to less than 28% of your monthly gross income.

 

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