home loans with less than 20 down: key facts for first-time buyers

How these mortgages work

Putting less than twenty percent down is common. Conventional options allow 3 to 5 percent, FHA permits 3.5 percent, and eligible borrowers may use VA or USDA with zero down. The tradeoff is added costs, usually private mortgage insurance or a funding fee. PMI protects the lender, not you, but it can be temporary.

Frequently asked questions

• Will my payment be higher? Likely yes, because of PMI and sometimes a slightly higher rate, but you preserve cash for repairs, reserves, and moving expenses.
• Is PMI forever? On conventional loans you can request cancellation near 80 percent LTV, and it must drop off at 78 percent. FHA insurance can last for the life of the loan with small down payments.
• How do I lower costs? Shop lenders, compare PMI types, improve credit, consider points, or nudge the down payment to a tier that reduces insurance.
• What about closing funds? Plan for 2 to 5 percent in closing costs; ask about seller credits, grants, or approved gift funds.

Get preapproved early, understand appraisal gaps, and confirm rules for removing PMI before you sign.