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There are a lot of loan programs available right now, including some that require very small down payments. I thought 20 percent was the traditional amount. How much money should I have for a down payment?

A down payment of 20 percent of the purchase price is ideal because it will eliminate the need for Private Mortgage Insurance (PMI) and allows the option of escrowing taxes and insurance. But there are other programs available that require little or no down payment. Options from the U.S. Department of Agriculture and the Department of Veterans Affairs cover up to 100 percent of the purchase price, eliminating the need for any down payment at all. But these loans have eligibility requirements, so check with your lender.
 
Federal Housing Administration loans can be obtained with only 3 percent down (this will increase to 3.5 percent Oct. 1). This money can be a gift from an allowable source such as the buyer’s parents or another relative. It’s important to know that a gift is not a loan to be repaid, but a true gift of money.
 
Conforming loans will require a minimum of 5 percent down payment, part of which can also be a gift from a qualified source. The down-payment requirements could be higher if the property is an investment property or second home.

It’s important to know how much you can afford and some of your loan options before you start the househunting process.

House Helper answers are provided by area industry professionals and are the opinions of our experts. Triad Homes does not make any representations as to opinions and facts.

If you have questions that can be answered by a Realtor, remodeler, builder or mortgage adviser, send them to Heather L. Modlin at hmodlin@news-record.com.

About our contributor
Melanie Troutman is a mortgage adviser with Coldwell Banker Mortgage in Winston-Salem. She can be reached at 748-5357 or Melanie.Troutman@mortgagefamily.com.