Busting the 20% Down Payment Myth for First-Time Buyers

True or False? In order to receive conventional financing, you’re required to have a 20% down payment.

If you picked false, you are correct! You do not need a 20% down payment in order to get a conventional loan. You can actually obtain conventional financing with a down payment as low as 3%!

One thing to keep in mind, though, if you put less than 20% down, your mortgage lender will require you to pay PMI.

What is PMI??

PMI stand for Private Mortgage Insurance and it protects the lender in the event you default on the loan. The good thing though, once you hit 20% equity on your home, whether that be through paying it off over time or through appreciation, you’re able to cancel PMI on a conventional loan. You are not however able to cancel PMI on an FHA loan.

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