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Down Payment Options in 2019

Minimum Down Payment Requirement 2019

Minimum Down Payment by Loan Type

  • VA – Veteran Housing Benefit – No Down Payment
  • USDA Guaranteed – No Down Payment
  • Conventional – Fannie & Freddie 3% Down
  • Conventional – Fannie & Freddie 5% Down
  • FHA Insured – 3.5% Down Payment
  • First/Second Piggyback – 89.99% CLTV
  • Jumbo Financing – 20% Down Payment
  • Jumbo Bank Buster Loan – DU Approve
  • Portfolio Loans – Buy sooner after hardship
  • Working With Professionals

Minimum down payment is the number one issue for first time homebuyers.  The biggest hurdle for most first time homebuyers is coming up with the down payment and closing costs.  It seems like a mountain too high to climb sometimes.

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Your closing costs can be paid by other parties, so we’re going to set that aside for now.

Minimizing your down payment is most often the goal of first time buyers. My experience is that there is a lot of confusion about what the minimum down payment is for each loan program.

My goal here is to create a single resource to help you to compare all of your down payment options.

The easiest way to explore these limits is to sort by loan type.

VA – Veteran Housing Benefit – No Down Payment

VA loans allow 100% financing up to the conforming loan limit.  If you are buying in a High Cost County, like in Southern California, the VA limit will extend to the high balance loan limit for your County.

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For purchases prices above the conforming loan limit, the Veteran is only required to pay 25% of the difference above this conforming loan limit, and your purchase price.

In high cost counties, coming in with the 25% difference is significantly less than any Jumbo loan down payment requirement.

If you are eligible for a VA guaranteed loan, there is no better option for buying a home.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 100% LTV – Zero Down Payment
Rental Property N/A N/A

USDA Guaranteed – No Down Payment

USDA is another 100% financing loan for families buying in USDA eligible areas.

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USDA guaranteed loans do not have loan limits like typical loan programs.  Instead, USDA uses income limits and three different income calculations to determine your maximum purchase price.

You can research income, and property eligibility with the USDA Lookup Tool.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 100% LTV – Zero Down Payment
Rental Property N/A N/A

Conventional – Fannie & Freddie 3% Down

Most people do not know that Conventional financing downpayment requirements start at only 3% of the purchase price.

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  • If you’re using a Fannie Mae loan, this program is called HomeReady.
  • If you’re using a Freddie Mac loan, this program is called HomePossible.

Important features to these programs include discounted mortgage insurance, and a cap on loan level price adjustments (LLPA).  A cap on LLPAs will keep closing costs and interest rates under control.

Both of these special programs have different qualifying guidelines and income limits to use the 3% down payment option.

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Make sure you discuss both of these options with your loan officer if you are interested in going this direction.

Occupancy Transaction Type Maximum Loan to Value
Owner Occupied Purchase 97% LTV – 3% Down Payment
Rental Property N/A N/A

Conventional – Fannie & Freddie 5% Down

I am surprised at how many visitors to this site believe that conventional home loans require 20% down payment.

If you can meet the 3% down payment guidelines, that’s great!  If you cannot meet location or income requirements, conventional financing only requires a 5% down payment up to high cost County loan limits.

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Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 95% LTV – 5% Down Payment
Rental Property Purchase 85% LTV – 15% Down Payment

FHA Insured – 3.5% Down Payment

FHA insured loans are an amazing opportunity for anyone purchasing an owner occupied home that requires more flexible qualifying, and a lower down payment.

The most important restriction you need to know about FHA insured loans is that it can only be used to purchase a home that you will live in as your primary residence.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 100% LTV – Zero Down Payment
Rental Property N/A N/A

First/Second Piggyback – 89.99% CLTV

A first and second piggyback loan is becoming a more popular option as home values rise around the Country.

The most common reason why a piggyback loan is used is to avoid mortgage insurance, or Jumbo financing.

The maximum first mortgage would normally be either the maximum conforming loan limit, or 80% loan to value, whichever is greatest.

Piggyback second loans are most commonly used with a Conventional first mortgage.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 80% LTV 1st TD / up to 9.99% HELOC – 89.99% CLTV
Rental Property N/A N/A

Jumbo Financing – 20% Down Payment

As a general rule, Jumbo financing will require 20% down payment or more, depending on your credit scores, and the amount you are trying to borrow.

These numbers represent a loan amount up to a million dollars, with a minimum 720 FICO.

Occupancy Transaction Type Max Loan to Value / Min Down
Owner Occupied Purchase 80% Loan to Value / 20% Min Down
Rental Property Purchase 60% Loan to Value / 40% Min Down

Jumbo Bank Buster Loan – DU Approve

Mortgage Brokers Celebrate a New Wholesale Jumbo Mortgage Loan available in December, 2018. 

This new wholesale jumbo mortgage loan was designed to compete directly with big bank interest rates, except with the speed and underwriting flexibility you get from an independent mortgage broker.

Bank Buster Jumbo Mortgage Loan Guidelines

Wholesale Jumbo Mortgage Loan Limits:

  • Minimum Loan Amount:  $726,525
  • Maximum Loan Amount: $1,500,000

Downpayment / Equity Requirements:

  • 20% Down Payment allowed for all programs
  • 20/10/10 Allowed – Use Piggyback second and 10% down.
  • 80% Equity for Refinance / Cash Out Refinance

Eligibility Requirements Quick Look

  • 30 Year Fixed Rate Term
  • Can only use for Primary Residence or Second Home
  • Investment properties are not allowed
  • Single Family or Owner Occupied Duplex Allowed Properties
  • Maximum Debt to Income of 43% DTI
  • Loan must be run through Fannie Mae DU (Only)
  • Must obtain Approve/Ineligible Automated Underwriting Findings
  • 30 Year Fixed Rate Only (No ARMs)
  • Minimum FICO 700
  • Texas Conversion loans and Texas 50(a)(6) are not eligible
  • Subordinate Financing is acceptable with a maximum CLTV/HCLTV of 90%

This loan isn’t going to be for everyone, but if you do fit into these guidelines, it would be hard to beat the automated underwriting process.  You’ll know right away if you qualify, reserves will be minimal.

If you are in California, I can be reached at BuyWiseMortgage.com, a California Mortgage Broker.

Portfolio Loans – Buy sooner after hardship

Portfolio loans bridge the gap between your preparedness to buy a home, and the waiting period requirements after a significant financial hardship like bankruptcy, foreclosure, short sale, or deed in lieu of foreclosure.

These loans tend to be 5 to 7 year ARM loans, fixed for 5 or 7 years, and adjustable after the fixed period.

The ideal use of one of these programs is when you are eligible for a traditional, more stable loan within 3 to 5 years max.

For portfolio loans, the time from the financial hardship directly affects the minimum down payment.  See below:

Occupancy Hardship Event Max Loan to Value / Min Down
Owner Occupied Less than 12 months (1 day ok) 80% Loan to Value / 20% Min Down
Owner Occupied Greater than 12 less than 24 months 85% Loan to Value / 15% Min Down
Owner Occupied Greater than 24 months 90% Loan to Value / 10% Min Down

Working with Professionals

I can not emphasize enough the importance of hiring a professional, experienced Realtor and loan officer when selling or buying your first home.

When you call a lender from a TV or radio commercial, or click an ad you saw on the internet that has a catchy headline, you are playing competence roulette.

I personally have been in the business for close to 20 years, and started this website 10 years ago to educate and empower consumers.

We have had over a million consumers visit this website and I have answered many thousands of questions from folks all over the Country.

If you are trying to buy or refinance your home in California, I can help.  You may ask questions about your options below, or shoot me an email directly to scott@buywisemortgage.com.

If you are outside of California, I can introduce you to a loan officer from our Expert Network that I personally know and trust.

About Your Expert

Scott Schang

A 20 year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues, and making sense of complicated real estate and mortgage topics on this website since 2007

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