Core Insights - The article emphasizes that a 20% down payment is not a requirement for home purchases, highlighting the availability of low-down-payment options like the 3% down conventional loan [1][2]. Group 1: 3% Down Payment Mortgage Overview - The 3%-down mortgage is classified as a conforming loan, governed by the rules set by Fannie Mae and Freddie Mac, and is offered by private mortgage lenders [2]. - Conventional loans are the most prevalent type of mortgage in the U.S., accounting for approximately 9.2 million out of 12.2 million mortgage loans issued in 2024 [3]. Group 2: Qualification Criteria - To qualify for a 3%-down mortgage, borrowers must have the 3% down payment saved, meet certain income limits, and may need to be first-time home buyers [4][10]. - Additional requirements include having a credit score of at least 620 and a debt-to-income ratio of 45% or less [10]. Group 3: Mortgage Insurance - Borrowers making a 3% down payment are required to pay for private mortgage insurance (PMI), which protects lenders in case of default [5][6]. - PMI typically adds about $30 to $70 to monthly payments for every $100,000 borrowed, and can be canceled once the borrower reaches 20% equity in the home [6][7]. Group 4: Advantages and Disadvantages - The primary advantage of a 3%-down mortgage is the reduced upfront cash requirement, allowing for quicker home purchases and freeing up cash for other expenses [8][9]. - Disadvantages include the obligation to pay PMI, slower equity building, and higher total interest costs due to a larger loan balance [11]. Group 5: Alternatives to 3% Down Payment Mortgages - Other options for low-down-payment mortgages include FHA loans, VA loans, and USDA loans, which may have different down payment requirements and insurance conditions [12][16].