Are you getting ready to purchase a home, but need to come up with the cash for the down payment? If so, you likely have some questions about this expensive part of the home buying process.

Is It Possible To Purchase A Home Without A Down Payment?

Most lenders are going to require a downpayment to purchase a home. However, there are some types of loans that you may qualify for which do not require any down payment. This is mainly true for government-backed loans, which provide a much smaller risk to the lender that is servicing your loan. More specifically, VA loans are a popular choice for a mortgage that doesn't require a down payment, but it does require that you qualify for it with active service in the armed forces.

Why Provide More Than The Minimum Down Payment

While many mortgage lenders will have a minimum down payment that you must provide, there are a few advantages to providing a larger down payment. The biggest advantage comes from providing 20% for a down payment, which means that you do not have to pay private mortgage insurance (PMI). Borrows need to pay PMI when they provide a small down payment because they are viewed as a more risky lender. Some mortgages allow PMI to be removed when you've reached 20% equity in your home, while others make you pay PMI for the life of the loan if you provided less than 20% for a down payment. 

How Big Of A Down Payment Can You Provide? 

When it comes to how big of a down payment you can provide, know that there are typically not many financial advantages to providing more than 20% of the home's purchase price. You'll be avoiding private mortgage insurance no matter what type of loan you get, and you'll be getting the best interest rate if your lender uses your down payment as a factor.

That said, you can provide a larger down payment if you want in most cases. You'll end up reducing the value of the loan and how much in interest you pay over time, which saves you money in the long run. 

Where Can You Get The Money For A Down Payment?

Be aware that you do not need to have all of the cash on hand for a down payment. It is possible to borrow from some retirement accounts as long as it comes from the money that you've contributed and not the earnings. 

You can also receive a gift from a family member for your down payment, but there are limits to how much you can receive. Ask your lender about what gift limits would apply to your loan. 

Contact a mortgage loan lender for more information.