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How to Buy a Home With a Low Down Payment

If you want to buy a home and do not have much cash upfront for a down payment, don’t worry. You can likely still buy the house you want in Southern Maine. There are a few ways to do this without having to pay the typical 20 percent down payment. Before you start adding up the upfront costs of buying a home in Maine, you should check out a few types of loans that allow you to keep the down payment to a minimum.


If you’re willing to look outside the big city for a home, you might qualify for a USDA loan. This is meant to help first-time buyers purchase homes in rural areas, but many suburbs actually qualify. The list of qualified cities changes often, so you’ll have to check it out to see if it includes the area you’re interested in. If it does, and if your income is lower than the maximum on this program, you might be able to get a home loan without a down payment at all! You also won’t have to pay mortgage insurance with this type of loan, though there are a few small fees that equal about 2 percent of the home loan.

VA Loan

If you are a military veteran, you won’t have to pay a down payment when you get a VA loan. This is another option that does not require mortgage insurance, which is just another way that you’re able to save money. Like the USDA loan, though, there are a few fees. In particular, you can expect to pay a funding fee that will equal anywhere from 2 to just over 3 percent of the home loan.

Fannie and Freddie Backed Loans

If you can pay at least something upfront but still want to avoid paying 20 percent, you’ll be glad to know there are a few home loan programs that make this possible. They tend to change every few years, but they are always backed by Freddie Mac and Fannie Mae, and they usually make it possible to buy a house with just a 3 percent down payment. Simply ask your real estate agent which program would be right for you.

FHA Loan

This is the old standby for homebuyers who cannot afford to make a 20 percent down payment. As long as your credit score is at least 580, you can look forward to only having a down payment of 3.5 percent. Like many home loans, there are also a few fees you will have to pay, such as an upfront fee of 1.75 percent of the amount of the mortgage of the house. But this is still much less than the typical 20 percent many homeowners have had to pay with other loan types.
If you are interested in finding a home in Southern Maine and do not have the means to make a 20 percent down payment right now, please contact us today to find out more about your options.