I want to buy a house but I can’t come up with a $30,000 down payment. What other options do I have besides continuing to save money?

It’s no secret that home prices have been rising in the U.S. Because of this, buyers have to pay more for down payments to meet lenders’ requirements. Generally speaking, it’s common for traditional lenders to require at least a 10% down payment. But if you don’t pay at least 20% down, you’ll face the issue of PMI, which is expensive, so many people want to avoid it. Realtor data found that in the third quarter of 2023, buyers’ median down payment was $30,000.

But what if you don’t have that much cash on hand?

1. See if your lender will lower your down payment to 5%

You might find a traditional lender that will let you put 5% down instead of 10% or more. This isn’t uncommon, but it’s risky. If you only put 5% down, you won’t have much equity in your home to begin with. Once the home’s value drops, your loan could become insolvent. This could become a problem if you need to sell.

2. Look at FHA loans

With an FHA loan, you can buy a house with only a 3.5% down payment. However, you need a credit score of at least 580 to meet this standard. In addition, FHA loans have certain additional costs. Not only do you need to pay a mortgage insurance premium (MIP) equivalent to 1.75% of the loan, but you also need to pay it on an ongoing basis.

Just like PMI, this can add a significant amount to your housing costs. Plus, if you don’t make a down payment of at least 10 percent on an FHA loan, ongoing MIP will apply to the entire life of your loan.

3. See if you qualify for a VA loan

If you are a U.S. military member, former military member, or the surviving spouse of a military member, then you may qualify for a VA loan. A VA loan allows you to buy a home with no down payment. However, when you go this route, you may run into problems if the value of the home decreases after you buy it, making the loan insolvent.

Another issue is that you’ll be faced with expensive upfront financing fees, which can range from 1.25% to 3.3% of the loan amount, depending on your down payment and whether this is your first VA loan.

Interest rate reduction! Refinance adjusts the actuarial interest rate during the repayment period to reduce repayment pressure