Low Down Payments and Loans, and How Do They Work?

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what is a low down payment?

A low down payment is anything less than the standard 20 percent down on a loan.

Are there low down payment home loans?

Yes.

There are numerous programs to help first-time buyers with little or no down payment, including FHA, VA and Fannie Mae's Community Home Buyers Program. Additionally, many people borrow with less than 20 percent down by obtaining private mortgage insurance, or PMI.

How do low down programs work?

Most private and government low-down loan programs have special requirements. These rules range from requiring borrowers to be first-time buyers to family income specifications.

Some programs, such as the Federal Housing Administration, do not place income restirctions and do not require the borrow to be a first-time buyer.

Many private low-down loan programs require good credit and private mortgage insurance, which is a small monthly insurance payment that insures against default. Some of the city and county programs are available only in targeted neighborhoods where local leaders are trying to spark reinvestment or increase the homeownership rate.