Unlocking Homeownership: What You Really Need for a Down Payment

Is a Down Payment Holding You Back from Buying a Home?

You’re not alone. Many aspiring homeowners believe they need a 20% down payment to buy a house - but that’s just a myth. In reality, plenty of people are buying homes today with much less. And yes, you can too.

What Is a Down Payment?

A down payment is the upfront money you pay when buying a home. It’s typically a percentage of the home’s price.

For example, on a $300,000 home:

• A 10% down payment = $30,000 out of pocket.

• The remainder ($270,000) would be covered by your mortgage.

You then pay off the mortgage over time, with interest.

What’s the Minimum Down Payment to Buy a House?

Minimum down payments vary depending on the type of loan:

• Conventional loans (Fannie Mae or Freddie Mac): As low as 0%

• FHA loans: 5% minimum.

• VA loans: 0% down for qualified veterans, active-duty military, and eligible spouses.

However, if you put down less than 20%, you’ll typically need to pay Private Mortgage Insurance (PMI) – an added cost that protects the lender if you default.

How Much Should You Put Down?

There’s no one-size-fits-all answer – it depends on your goals, budget, and how soon you want to buy. Here are some key factors to consider:

Pros of Putting Less Down:

• Buy Sooner: Don’t wait years to save 20% - you could start building equity today.

• Keep Cash in Reserves: Hold on to savings for emergencies, home repairs, or investing elsewhere.

• Home Value Gains: Even with a small down payment, you benefit from 100% of any appreciation.

• More Assistance Options: Many low down payment programs qualify for grants or first-time buyer aid.

• Smarter Money Use: Your savings might grow more in an investment rather than being tied up in your home.

Cons of a Smaller Down Payment:

• Higher Monthly Payments: You’re borrowing more, so your payments will be higher.

• PMI Adds Cost: Most loans under 20% down require PMI, which bumps up your monthly payment.

• Slower Equity Growth: It may take longer to build ownership in your home compared to making a larger down payment.

A Practical Rule of Thumb

• Put down as much as you comfortably afford without draining your emergency savings.

• A 5-10% down payment is often a sweet spot – more flexible than the minimum, but without the long wait to save 20%.

• In hot markets, a larger down payment can help your offer stand out to sellers.

What about PMI? Is There a Way to Avoid It?

Yes. While PMI is usually required with less than 20% down, there is an alternative – Lender-Paid Mortgage Insurance (LPMI) from Premia Mortgage.

With LPMI, we cover the cost of PMI by adjusting your interest rate slightly higher – so you don’t have to pay monthly PMI separately.

Pros of LPMI:

• No Monthly PMI Payment.

• Simplified Mortgage Payment (just principal and interest).

• Mortgage Interest May Be Tax-Deductible, unlike PMI.

Cons of LPMI:

• Higher Interest Rate: You’ll pay more in interest over time.

• No Cancellation Option: Unlike regular PMI, you can’t cancel LPMI when you reach 20% equity unless you refinance.

• May Cost More in the Long-Term: If you never refinance, LPMI could end up costing more over the life of the loan than monthly PMI.

We’re Here for You!

With an average tenure of 17 years, our loan officers are seasoned subject matter experts who will help you determine if you’re better off paying PMI or if LPMI is more cost effective over the life of your loan.

Our 2025 Homeownership Event – Going on Now!

Whether you’ve saved 3% or 20%, there’s a loan option waiting for you! Apply online or give us a call at 866-591-0655 to talk through your options with no pressure and no obligation.

Limited-Time Offer – Mention this promotion to receive:

• Up to $1,500 in closing cost credits**

• A free home appraisal (valued up to $750)**

Final Thought:

Don’t let down payment myths hold you back. With the right loan and the right guidance, owning a home might be easier – and more affordable – than you think.

Explore your options, get expert advice, and make your move with confidence!

*Premia Mortgage, LLC. does not provide tax advice. Please direct all tax-related questions to your tax adviser.

**Eligible borrowers can elect to have the fee built into their rate/APR and not pay it at closing, or pay the lender fee at closing and receive a commensurate reduction in their mortgage rate. Additionally, they will receive a complimentary appraisal credit up to $750. If a property qualifies for an appraisal waiver, the borrower’s transaction will not be eligible to receive the appraisal credit. Offers are available for loan applications dated from 05/01/2025 through 07/31/2025 at 11:59pm EST. Qualified participants must be considered a first-time home buyer (any individual who has not had a mortgage or owned a home in the past 3 years), a non-relocating employee, and be subject to credit and underwriting approval. This is not a commitment to lend. Restrictions may apply.

Qualified participants must access the Premia Relocation Mortgage website at https://www.premiarelocationmortgage.com/ to successfully complete a mortgage loan application and close the mortgage loan with Premia Relocation Mortgage. Applicants are subject to credit and underwriting approval. Restrictions may apply.

Premia Relocation Mortgage cannot guarantee that an applicant will be approved or that a closing can occur within a specific timeframe. All dates are estimates and will vary based on all involved parties level of participation at any stage of the loan process. Contact Premia Relocation Mortgage for more information.

Premia Relocation Mortgage is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the Nevada Department of Veterans Services, the US Department of Agriculture, or any other government agency. No compensation can be received for advising or assisting another person with a matter relating to veterans’ benefits except as authorized under Title 38 of the United States Code. Applicant is subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of the application does not represent an approval for financing or an interest rate guarantee. Restrictions may apply—contact Premia Mortgage, LLC. for current rates and more information.

All information provided in this publication is for informational and educational purposes only, and is not to be construed as financial, investment, or legal advice. Premia Mortgage, LLC. does not guarantee the quality, accuracy, completeness, or timeliness of the information provided. While efforts are made to verify the information, it should not be assumed to be error-free. Some information may have been provided by third parties and has not necessarily been verified by Premia Mortgage, LLC.

Premia Mortgage, LLC. assumes no liability for any damages whatsoever arising out of or in connection with the use of this publication or reliance on its information, including any personal or financial loss, whether the action is in contract, tort (including negligence), or otherwise.