What Are My Down Payment Options?

Purchasing a home is a monumental milestone, and understanding your down payment options is crucial for making informed decisions.

Your required down payment can vary based on the loan type, the lender, and your unique circumstances. In Hawaiʻi, where home prices tend to be higher, this becomes a key factor in deciding what you can afford. Fortunately, there are mortgage options that can help make homeownership possible.

Understanding down payments

A down payment is the upfront amount you pay toward the purchase price of a home, typically expressed as a percentage. While a 20% down payment is often recommended to avoid private mortgage insurance (PMI), it typically isn’t required. In fact, recent surveys show first‑time buyers typically put down about 10%, while repeat buyers often contribute more due to accumulated equity

What are some lower downpayment options?

1. Conventional Loans

Conventional loans are home loans that come from private lenders and often follow eligibility and underwriting standards created by Fannie Mae® or Freddie Mac®.

Minimum down payment: 3% for qualified borrowers (such as those using Fannie Mae® HomeReady® or Freddie Mac Home Possible®).

Grants and gifts: You may be able to use grants, gift funds, or down payment assistance to cover some or all of your minimum down payment and/or closing costs, subject to program rules. However, the main conventional mortgage still requires at least 3% down.

2. FHA (Federal Housing Administration) Loans

FHA Loans are home loans backed by the Federal Housing Administration (FHA) and are designed to help borrowers who may not qualify for conventional financing with lower down payment amounts.

Minimum down payment:

• 3.5% of the Adjusted Value* if their credit score is 580 or higher. 
• 10% with a credit score between 500–579*

 Just like conventional loans, your down payment can come from gift funds or assistance programs.

*For FHA loans, the adjusted value is the lesser of the purchase price of the home or the FHA appraised value of the home.

3. VA (Veterans Administration) Loans

VA loans are home mortgages that help active-duty service members, veterans, and eligible surviving spouses buy or refinance a home with flexible, affordable terms.

Minimum down payment: $0 down payment in most cases, with full entitlement, subject to lender approval and property appraisal. In certain cases, such as very large loan amounts (Jumbo Loan), a down payment may be needed.

4. USDA (United States Department of Agriculture) Loans

Many communities across Hawaiʻi—especially outside major urban cores—may qualify for USDA Loans. They’re government‑backed mortgages designed to help low‑ to moderate‑income borrowers purchase homes in eligible rural and some suburban areas.

Minimum down payment: 0% down for qualified borrowers purchasing in eligible rural areas.

Even though no down payment is needed, you could still choose to put money down to reduce your monthly payment, interest paid over the life of the loan and slightly reduce USDA’s required guarantee fees.

What are the benefits of making a larger down payment?

• Lower monthly payments: A larger down payment reduces the loan amount, leading to lower monthly mortgage payments.
• Avoiding PMI: For most conventional mortgages, putting down at least 20% eliminates the need for private mortgage insurance, reducing your overall loan cost.
• Better loan terms: Lenders may offer more favorable interest rates to borrowers who make larger down payments.

Want to learn more?

Visit these useful resources to help you move from homebuyer to homeowner.

• Get prequalified to see how much house you can afford.
• Visit our Buying a Home education hub for tips on everything from how much you can afford to financial do’s and don’ts.
• Download our Complete Guide to Buying a Home in Hawaii for local insights

Let’s make homebuying possible

The right relationship can make the mortgage process easier. At Bank of Hawaii, we’re here to guide you every step of the way, from prequalifying and applying for your mortgage to the moment you become a homeowner. To get started, check out our competitive rates, book an appointment with one of our mortgage experts, or visit any branch.