FHA Loans

• FHA loans have been a popular type of loan due to their down payment percentage being only 3.5 percent of the total sales price. However, with FHA financing options there is a upfront mortgage insurance premium as well as a monthly mortgage insurance premium in order to protect the lender's investment in the event of default on the loan.
  
  

Conventional Loans

• Conventional loans will require a 10 percent to 20 percent down payment. Interest rates are based on a buyer's credit score, and there is a monthly mortgage insurance premium that the buyer will pay until she reaches 20 percent equity in the home.
  
  

Adjustable Rate Mortgages

• Adjustable rate mortgages require a minimum down payment of 5 percent of the total sales price. The interest rate on this type of loan will vary based on current market conditions and will rise over time. However, the interest rate can not exceed a 5 percent increase over the duration of the loan.
  
  

VA Mortgages

• VA mortgages are only available to active duty, medically discharged or honorably discharged members of the armed services. While VA loans do not require a down payment on the part of the buyer, the buyer does have an option to make a down payment on the loan in order to build equity in the property faster for better resale value.
  
  

USDA Mortgages

• USDA mortgages were created to assist in the growth and development of rural areas. Only certain areas are eligible for this type of loan. A USDA loan does require a good credit history in order for a buyer to be eligible for a zero down loan.
  
  

Misconceptions

• Many home buyers believe that the down payment is due upon the signing of a contract to purchase a home. This is not the case. Down payments and closing costs are due at the closing appointment and not before. What is due at contract signing is the earnest money, which is a deposit to hold the house, however this is credited to the buyer at closing, deducting from their down payment and closing costs.