Low Down Payment Facts

You’d like to buy a home, but you can’t manage that 20% down payment. Sound familiar?


Surveys show down payment is the biggest impediment to buying a home. In reality, many individuals can qualify for a mortgage with as little as 3% down.

Private mortgage insurance (MI) has facilitated affordable and sustainable homeownership for families with low down payments for 60 years. Since 1957, MI has helped more than 25 million families become homeowners. In the past year alone, MI helped more than 830,000 homeowners purchase or refinance a mortgage. Nearly half were first-time homebuyers and more than 40 percent had incomes below $75,000.

But before you select the low down payment mortgage, it’s important to compare loans and do the math to find what works best for you. You should consider how much cash you need in hand, the monthly mortgage payment, and if that payment will go up or down in the years to come. Here’s a crash course in low down payment mortgage options to help you make a more informed decision.

  • Conventional Loan with PMI: A conventional loan is a traditional mortgage from a lender that isn’t insured by a government agency. Borrowers can get conventional loans with PMI for as little as 3% down. PMI can also be cancelled once 20% equity in home value is reached, which means your monthly bill will decrease.
  • A Combo Loan (aka Piggyback Mortgage): A piggyback involves two separate loans simultaneously. Some say the main benefit of piggybacks is that the borrower doesn’t have to pay PMI. However, the reality is that piggybacks are often more expensive than conventional MI because borrowers are paying closing costs on two loans. Piggybacks also can’t be cancelled, and the second loan often comes with higher interest rates.
  • FHA Loans: FHA loans are insured by the government through the Federal Housing Administration. A borrower can get a FHA loan with as little as 3.5% down and a FICO score as low as 600. However, FHA mortgage insurance can’t be cancelled, and FHA loans are subject to an upfront fee of 1.75% that is financed over the life of the loan.

Need more information before you make your decision? Click here to do the math and see which option works best for you – or check out a few other resources below that might be helpful to you.

  • Tired of renting? Find out how you can buy a home now with our award-winning online tool, EssentIQ! It’s free and available in English and Español.
  • Private mortgage insurance can help you get into the home of your dreams, sooner and more affordably. Find out more at www.nationalmi.com/homeforyou
  • First-time homebuyers no longer need to scour the web for information – we’ve collected the key tips, insights, and tools you need to navigate the homebuying process with ease. Visit AchieveTheDream.com today.

  • Buying a home? Learn why you’ll be glad you picked a loan with MI from Genworth―with affordable monthly payments and value-added benefits like Homebuyer Education, Home Suite HomeSM, Homebuyer Privileges® and Homeowner Assistance. Visit SmarterMI.com.

  • Learn more at our website lowdownpaymentfacts.com

© Copyright 2024 U.S. Mortgage Insurers