The 3% Down Conventional Loan Most Buyers Miss

Many first-time buyers assume FHA loans are the main low-down-payment option, but there are conventional programs that only require three percent down.

Two of those programs are called HomeReady and HomePossible. They allow first-time buyers to purchase with as little as three percent down, and that entire down payment can come from a gift.

These programs do have income limits — typically eighty percent of the area’s median income — but the limits are often higher than people expect.

In the Austin area the limit is over $100k, in Dallas it’s over $90k, and in Houston it’s over $80k. Some areas even have no income limits.

For buyers with good credit, these programs often offer lower monthly mortgage insurance than FHA, which can mean a lower monthly payment. And unlike FHA loans, they don’t require upfront mortgage insurance.

They also allow helpful underwriting flexibility. For example, if student loans are on an income-based repayment plan and the payment is currently zero dollars, we may be able to use that zero payment when qualifying.

So if you’re a first-time buyer, it’s worth asking about these programs to see if they might work for you.

And remember — it’s always okay to ask. We’re here to help you get home.