How Much Downpayment Is Required For a Conventional Mortgage

Prior to the closing of a home loan, a buyer must generally put anywhere from 3.5 to 20 percent of the purchase price down. In the event a person uses a VA loan or USDA loan, it may be possible to get 100 percent financing. In addition to the type of loan used, a lender may have other criteria that it uses to determine your down payment.

Government Loan Down Payment Minimums Are Only Guidelines

If a person uses an FHA loan to buy a home, the government says that he or she must come up with a down payment of at least 3.5 percent. However, a lender may determine that a borrower must come up with 5 or 10 percent down. This may happen because a specific lender is located in an area with a higher rate of defaults or other variables that force it to assume a higher level of risk. Lenders may also require those with lower credit scores to pay more upfront to reduce the overall risk.

Borrowers May Be Able to Negotiate

Typically, a conventional loan requires a person to come up with a 20 percent down payment. However, a borrower may be able to convince a lender to reduce that amount slightly to make it easier to complete the purchase. Individuals with a credit score above 700 or who have a relatively low debt-to-income ratio are most likely to obtain concessions. This is because they are less likely to default on their obligation to repay the mortgage. (Read more on how to reduce interest rates on a mortgage.)

Talk to a Loan Officer to Learn More

If you are ready to start the mortgage application process, the best loan officers in Las Vegas are ready to help. They can talk more about what a down payment is, whether funds can be gifted and anything else that you want to know regarding this closing cost.