Are you ready to own a home of your own?

The potential of purchasing your first home can be both exciting and intimidating. A common source of anxiety is coming up with the down payment. Misconceptions about down payments can make the process seem more challenging than it is.

Chances are, you have been told to save up until you have that magic number: 20% of your dream home’s total value.  For the average American home, 20% amounts to a pretty big number. Throw in closing costs and you’ve got a small fortune to raise – and years to go until you reach your goal.

Let’s explore loan options that don’t require a large down payment and choose the one that aligns best with your financial situation.

Low Down Payment Loan Options

  1. FHA mortgage: FHA (The Federal Housing Administration) mortgages have helped homebuyers move into new homes for decades. These loans have down payments as low as 3.5%, making home ownership more accessible for buyers who may not have substantial savings.  If that number is still too high, the down payment can be sourced from a financial gift or via a Down Payment Assistance program.
  2. VA mortgage: VA mortgages require zero down payment; however, they are specifically designed to help eligible veterans and active-duty service members become homeowners.  VA loans often offer competitive interest rates that are on par with, or even lower than, those of conventional mortgages which can result in lower monthly mortgage payments and significant long-term savings. 
  3. USDA Mortgage:  Also known as a USDA Rural Development Guaranteed Housing Loan, a USDA mortgage is a type of mortgage program offered by the United States Department of Agriculture (USDA). This program is a 100 percent-financing, no-money-down mortgage loan to eligible borrowers.  To be eligible for a USDA mortgage, the property being purchased must be located in a designated area and the member must meet income guidelines designated by the USDA.
  4. 100% Financed Mortgage: Allows borrowers to finance the entire purchase price of their home without needing a down payment.  This mortgage is considered a "conventional loan"  because it is not insured or guaranteed by a government agency like the Federal Housing Administration (FHA), United States Department of Agriculture (USDA), or the Department of Veterans Affairs (VA).  Since there is no down payment, members will be required to pay for private mortgage insurance (PMI).
  5. 7/6 Adjustable Rate Mortgage (ARM): An ARM may require as little as 5% down and offers an initial fixed-rate period.  During this period, the interest rate remains stable, providing you with lower, predictable monthly payments. It's necessary for members to carefully assess their financial situation, long-term housing plans, and risk tolerance before selecting this type of mortgage as the rate can change after the fixed-rate period.


Be aware that each of these loans will require income eligibility, could include PMI (Private Mortgage Insurance), and other terms and conditions may apply.

Why Consider a Mortgage with a Lower Down Payment?

If you’re thinking of waiting and saving until you have 20% to put down on a home, consider this: A RealtyTrac study found that, on average, it would take a homebuyer nearly 13 years to save for a 20% down payment. In all that time, you could have been building your equity.

Ready to buy a home? Our Tyndall Mortgage Team would love to help you out! Call, click, or stop by today to learn about our options.  With a Tyndall Mortgage, you will spend 50% less on closing costs than with local competitors. *

Contact an Expert from the Tyndall Mortgage Team

Tyndall NMLS #597599.

*Source: Based on a Mortgage Research study conducted by a financial research firm in August 2022, based on 13 local Mortgage Lenders, on average Tyndall charges half of the total lender fees and closing costs on traditional mortgages