Buying

While many people still believe it’s necessary to put down 20% when buying a home, that isn’t always the case. In fact, lower down payment programs are making homeownership more affordable for new home buyers. In some cases, you might even be able to purchase a home with as little as 3% down, due to the type of loan you pursue and with multilayering the down payment programs.*

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Benefits of putting more than 20% down

If you’re able to do so, you may want to consider putting down a payment that’s larger than 20%. Here are some of the benefits:

  • Lower monthly payment due to no mortgage insurance and smaller loan amount
  • Less interest paid over the life of the loan
  • More flexibility if you need to sell on short notice

Buyers putting down less than 20% are required to pay Private Mortgage Insurance (PMI) monthly until they build up 20% equity in their home.

Where PMI comes in

If you make a down payment of less than 20%, you'll have to pay PMI each month until you build up 20% equity in your home. Take the time to understand PMI as the cost can be relatively small in comparison to the value of being able to secure a 30-year fixed-rate mortgage sooner rather than later.

How much down payment you’ll need for a house depends on the loan you get. While there are benefits to putting down the traditional 20% — or more — it may not be required.

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Types of Loans

You can choose from a wide variety of loans. However, the four common types of mortgage loan programs are:

  1. Conventional Fixed-Rate Mortgages
  2. Conventional Adjustable-Rate Mortgage (ARM)
  3. Federal Housing Administration (FHA) Loan
  4. VA Loans

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Funding your down payment

While most buyers use personal savings to finance down payments, there are many other options, including gifts or loans from relatives. In addition, many state, county, and city governments offer down payment assistance programs to people in their communities who are well qualified and ready for homeownership.

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Progress

HPP CARES CDE's accomplishments these past few years have been significant and all-encompassing; striving to advocate under the National Coalition for Equities’ umbrella to maintain a powerful community voice among the Federal and State regulators and major private sector corporations to address public policy issues, and to focus on the wealth & income inequality affecting affordable homeownership and small business growth. With the NCFE, HPP CARES CDE’s outreach efforts have led to an increase in corporate social responsibility and consumer protection. We have been able to reach more people, collaborate with more companies, meet with more regulators, all in the name of helping deserving individuals become sustainable homebuyers, successful small business owners, protected consumers and empowering California communities. HPP CARES CDE is at the forefront of helping people of color become partners in our mission to reduce income and wealth inequality and build stronger futures for all minority groups.