 TITLE: What Factors Do Mortgage Lenders Consider? CONTENT: What Do Lenders Require for a Down Payment?\n-------------------------------------------\nThe rule of thumb is to try to save at least enough to make a 20% down payment on a home. A down payment of this size will get you closer to the best loan interest rates, but some conventional loans have much lower down payment requirements.\nDepending on your situation, you may be eligible for a government-backed loan that allows you to put down very little. For example, a mortgage loan through the U.S. Department of Veterans Affairs requires nothing down, and loans through the Federal Housing Administration (FHA) permit as little as 3.5% down.\nHowever, the higher the loan-to-value ratio (LTV) on your loan, the more risk you're asking a lender to take on. For example, if the LTV is 90%, it means the lender is financing 90% of the home's appraised value, while you, as the buyer, are putting down 10%. When the LTV is high, the lender is taking on a high proportion of the debt, and might require you to have private mortgage insurance (PMI) to offset its risk.\nIf you take out a conventional loan and put down less than 20%, you'll probably get stuck with a higher interest rate, and you'll likely be required to pay PMI until you reach 20% equity. With an FHA loan, you often have to pay mortgage insurance for the life of the loan. END