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Down Payment Affordability: Tips for Millennial Homebuyers

Don't let common misconceptions about down payments prevent you from owning a home.


As more millennials are transitioning from renters to homeowners, many have concerns about the money required to take the next step. Affording the down payment on a home is the top concern for 50% of millennials breaking into the housing market, and the common misconception of the 20% down rule can be daunting.

Budgeting for a 20% down payment can be an overwhelming task for people planning to buy a home. However, there are many loan programs designed to help potential homebuyers save on their down payment.

Down Payment Assistance

Provided by federal, state, county, city and non-profit agencies, down payment assistance programs help potential homebuyers by lending enough money to cover some or all of the down payment.

There are three different options when choosing a down payment assistance program:

  • Apply for a grant. Provided by foundations or local governments, a grant doesn’t require reimbursement.
  • Take out a loan. Generally, through monthly payments, the loan will need to be paid back to the lender. These loans are occasionally interest-free.
  • Use tax credits. This is an amount of money subtracted from taxes owed so the potential buyer can put more money toward a down payment.

There are also a variety of other programs that support different groups, such as low-income individuals or public service professionals. Not all potential homebuyers will be eligible for these options, but they are worth exploring to see if you qualify.

Loan Options

There are many different mortgage loan programs to help cover the down payment of a home for any financial situation. It’s important to consider all options when shopping for a mortgage:

  • Conventional Home Loan: With down payments as low as three percent, conventional home loans generally offer more flexibility when it comes to loan terms.
  • FHA Loan: Designed for individuals with a low-to-moderate income level and credit score, FHA loans offer low down payments, allowing the borrower to buy a home with a minimum of 3.5 percent down payment.
  • USDA Loan: A mortgage loan program offered to potential homebuyers in rural areas. With no down payment requirement, borrowers can choose to make a zero down payment.
  • VA Loan: Home loans only eligible to Veterans and current service members, allowing borrowers to buy a home with little or no down payment.

Talk with a loan officer when considering different mortgage loan options to discuss the program requirements.

Owning A Home Is Not Out of Reach

Just because you don't have 20% down in cash sitting in your bank account, doesn't mean you can't own a home. Use these tips to decide how to make home ownership a reality.

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