Down Payment Options for a New Build, Explained

No, you don't need 20% down on a new build. VA loans can require no down payment for eligible buyers, FHA and conventional loans allow smaller down payments, and North Carolina has assistance programs. Putting down less usually means paying mortgage insurance.

Do you have to put 20% down on a new build?

No. Twenty percent is a milestone, not a requirement.

On a conventional loan, the CFPB explains that private mortgage insurance is typically required when your down payment is less than 20 percent of the price. That's where the number comes from. It's the line where mortgage insurance usually goes away, not the minimum to buy.

New construction uses the same loan programs as any other home. What changes is timing. A home being built can take months, so the size of your down payment, your deposits and your rate lock all need to fit that schedule.

The main options, side by side

Every option below has its own rules, and lenders add their own. Treat this as a map, then talk to a lender about the details.

The VA loan, from one veteran to another

I served in the Marines, so this one's close to home. The VA says its purchase loan generally requires no down payment, as long as the sales price isn't higher than the appraised value. It also doesn't carry PMI or mortgage insurance premiums. There may be a one-time funding fee.

You'll need a Certificate of Eligibility, you'll have to meet VA and lender standards for credit and income, and you'll need to live in the home. The VA says the loan can be used to build, buy or improve a home, so new construction qualifies.

How much of a down payment do I need for a $400,000 house as a first-time buyer?

It depends on the loan type and the lender, not on the price alone. VA loans can require nothing down for eligible buyers. HUD says FHA allows a down payment as low as 3.5% of the price. Conventional programs vary.

In North Carolina, the NC Housing Finance Agency offers down payment help through approved lenders. Its site lists the NC Home Advantage Mortgage, with assistance of up to 3% of the loan amount for first-time and move-up buyers, and an NC 1st Home Advantage option with a set dollar amount for first-time buyers. NCHFA defines a first-time buyer as someone who hasn't owned a home as a primary residence in the past three years. Program amounts and rules change, so check NCHFA's current terms.

Is $10,000 a good amount to put down on a house?

It can be, depending on the price and the loan. What matters more is what's left after closing.

A smaller down payment means a larger loan and, usually, mortgage insurance. A larger down payment lowers the loan but can leave you thin on cash. Remember you'll also need closing costs, deposits, and money for the things a new home might not include, like blinds.

My view: don't empty your savings to hit a down payment number. Keep a cushion. Then ask a lender to show you the payment at two or three down payment amounts side by side.

Questions to ask a lender

• Which loan types am I eligible for, and what does each require down?
• What will mortgage insurance cost, and how can it be removed later?
• Can a builder credit cover any of my closing costs?
• Do I qualify for NCHFA assistance through your company?
• How does the down payment fit the build timeline and deposits?

Who's writing this. I sell new homes for D.R. Horton at Collins Ridge in Hillsborough, so I represent the builder, not you. This guide is general education from my years on job sites and in sales. It isn't legal, tax or lending advice, and it doesn't describe any specific home, price or incentive. Check the sources linked below, and talk with your own lender, agent or attorney before you decide.