There was a time when the average down payment on a new home loan was much higher than it is today. Around 20 years ago, the average down payment required was around 20 percent. Today, there are several options for low down payments, including VA loans geared toward veterans and their families and FHA loans.

FHA Express  Home Loan

The FHA Express mortgage requires only a 3.5 percent down payment. This type of loan is ideal for families that have a steady stream of income, but that may not be able to provide the sizable down payment that was needed in the past. By not having to put as much money down, you can use that money for other things like buying furniture or paying off some high interest debt.

While there has been some controversy as of late about the down payment required on an FHA home loan, the fact remains that, for now, the down payment is still a low one. Some politicians and activists have suggested that the low down payment that comes with an FHA loan leads to more defaults, but it isn’t entirely clear whether that’s actually the case, statistically speaking.

VA Loan Guaranty

If you’re a veteran, you may be eligible for an even better deal than a low down payment home loan. If you qualify for a VA loan guaranty, you may actually be able to buy your home without any down payment whatsoever.

The way it works is this: VA guaranteed loans are loans offered by regular lenders, such as mortgage companies, banks or savings & loans companies. They are guaranteed by the government. This means that the lender is protected against any loss, even if you can’t repay the home loan.

In effect, this VA loan guaranty replaces the normal protection that the lender would get by requiring a down payment. There are other benefits to a VA loan guaranty as well, but this is perhaps the most significant.

Other Options

If you don’t qualify for an FHA home loan or a VA guaranteed loan, you may have other ways to reduce your down payment. Some lenders will negotiate the amount of the down payment with you, or may be willing to roll closing costs or other fees into the actual home loan amount. If the down payment is higher than what you can afford, talk to your lender to see what other arrangements they may be willing to make.

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