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A 20% Down Payment May Not Be Necessary for Your Des Moines Home

Dec 6, 2023 | Industry News

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Are you hoping to buy a new home in Des Moines, but worried that saving up for a 20% down payment seems impossible? You’re not alone. Many first-time homebuyers struggle to save enough for a traditional down payment. But here’s some good news: you may not need to put down 20% to buy a home. Let’s explore some other options that may bring home your dreams of homeownership, even if you don’t have that hefty chunk of money in the bank.


It is important to keep in mind that a down payment is just one piece of the home purchasing puzzle. You will also need cash on hand for closing costs, home inspections, appraisals, and other expenses that pop up. But these financial hurdles don’t have to stop you! You’ll likely still need a bit of savings, but programs exist to help responsible buyers with limited funds – especially when it comes to the down payment.


Explore Low Down Payment Mortgage Options

Conventional 97 mortgages allow down payments as low as 3%. You will need to pay private mortgage insurance to protect the lender, but this additional monthly fee has a tradeoff because you only need to tie up a fraction of your savings for the down payment. This leaves more cash free for closing, moving, and other unexpected costs. Of course, you will want to carefully compare interest rates and terms to find the best Conventional 97 loan that works for you.


The Federal Housing Administration secures FHA loans, so they represent less risk for lenders. They require only 3.5% down for credit scores starting at 580. FHA loans also offer competitive interest rates and low mortgage insurance. First-time homebuyers often choose FHA loans because they offer affordable home financing. Again, though, make sure to shop around to get the best deal.


If you are a military service-member or veteran, you may be eligible for a VA loan with zero down payment! These special mortgages are guaranteed by the Department of Veterans Affairs. Qualified veterans and active duty personnel pay no down payment or monthly mortgage insurance. A VA loan can only be used on your primary residence, and they do have loan limits based on local home prices. But they provide an incredible opportunity for the heroes who serve our country to find a place to hang their uniform!


Tap into Down Payment Assistance Programs

At one time, a 20% down payment was the gold standard for securing a mortgage. But today’s market offers more flexibility. If you save a bit of money regularly and diligently, you’ll soon have enough for a small down payment; and as we have seen in this article, there are other ways to fill the remaining gap or even eliminate a down payment entirely. So don't let down payment fears deter you from making your Des Moines homeownership dreams come true!



If you’d like to get preapproved for a mortgage, so you know what your options are, please reach out to us. We’re always happy to help.

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