Down Payment Help: What Home Buyers Need to Know - The Powers Playbook

Think you need 20% down to buy a home?

That’s one of the biggest myths in real estate.

In this episode of The Powers Playbook, Aaron Powers breaks down the different ways buyers can source a down payment when purchasing a home — including low down payment loan options, down payment assistance programs, gifted funds, and special programs available for certain professions and veterans. 

Whether you’re buying your first home, planning an investment property purchase, or simply trying to understand your options, this episode walks through the realities of today’s lending landscape and explains how buyers can prepare financially to enter the market.

In This Episode

• The difference between FHA, VA, and Conventional loans
• Why many buyers do NOT need 20% down
• How FHA loans can allow buyers to purchase with as little as 3.5% down
• Why VA loans remain one of the best loan programs available for veterans
• How down payment assistance programs work
• The pros and cons of using grant programs and financial assistance
• Special home-buying programs for teachers, first responders, union workers, and more
• How gifted funds from family members can help buyers purchase a home
• What buyers should know before purchasing an investment property
• Why investment properties typically require larger down payments

The Biggest Takeaway

Buying a home may be more achievable than you think.

The key is understanding:

•  which loan program fits your situation, 
•  what assistance options may be available, 
•  and how to build a long-term plan that works for your financial goals. 

Aaron also explains why buyers should pay close attention to the long-term conditions attached to some down payment assistance programs, including occupancy requirements and repayment obligations.

Building Toward Homeownership

One of the most important lessons from this episode is simple:

Start saving earlier than you think you need to.

Even small amounts saved consistently over time can help create opportunities later — whether that’s purchasing a primary residence or eventually investing in real estate.

The episode also discusses why having a financial plan, understanding your lending options, and working with experienced professionals can make the home-buying process much smoother.

Thinking About Buying a Home in Las Vegas or Henderson?

If you have questions about:
 ✅ down payment options
 ✅ loan programs
 ✅ first-time home buying
 ✅ investment properties
 ✅ or real estate in Southern Nevada

feel free to reach out.

📧 info@powersre.com

About The Powers Playbook

The Powers Playbook explores the intersection of family, wealth, and real estate. Each episode is designed to help listeners make smarter long-term financial decisions through practical conversations about homeownership, investing, and building wealth.

Subscribe for more conversations about:
 🏡 real estate
 💰 wealth building
 📈 investing
 👨‍👩‍👧 family financial planning

Transcript

SPEAKER_00 0:00

You've opened the powers playbook. You are going to family and real estate. Welcome back everybody to another episode of the Powers Playbook. This is your host, Aaron Powers. And the play that we're running today is uh actually coming from our uh man behind the camera, Mr. Al King. He was a guest on the show previously. And I asked him, I was like, hey man, what real estate topic uh would be helpful? What could we what could we go over today? And he said, you know what? Uh if I can't uh get my down payment funds all together by the time I want to purchase a home, what are my options? So that is the essence of today's episode is what are your options for down payment if you're looking to buy a home? So we're gonna go through those. Um, we'll do it from a couple of standpoints. One as just a regular primary residence buyer, and then uh just to piggyback off of that, for anybody who's looking for an investment property or a second home or something more creative, we can uh discuss that as well. So um, first off, you're you have a lot of options for down payment. Uh it's gonna depend uh upon you as the borrower. Um, there's always four things to determine when you're getting a loan for anything. So we're talking about down payment. It we're just gonna it's a given that you're gonna be borrowing money and getting a loan. Otherwise, if you're paying cash, down payments the entirety of the purchase. So it's four things it's credit, assets, down payment, and then what uh sort of uh like reserves or um job or you know, how do how does that concoction all come together, right? Um so for down payment purposes, uh it's gonna depend on the kind of loan you're getting. So you've got a few out there FHA loan, conventional loan, VA loan. Those are the big three. Um FHA is your first-time home buyer loan for a lot of people. It's also the one you're gonna get the best rate on most of the time. An FHA loan is three and a half percent down. So you may want to maybe to write these down as I go through them so you can kind of uh take notes and follow along. So FHA, uh federal housing administration, down payment three and a half percent. Okay. VA loan. A VA loan is only if you're a veteran, you can only get this if you've either uh served or are active in the military. There are opportunities that you can get this from a family member, use their VA benefit. Um probably a whole separate episode, but reach out if you have questions on VA. VA loan is no money down, so you do not have to put down a dollar for down payment. Um, we do have to source funds, you do have to be able to make the payment. Um, there are other things involved with this, but a VA, you can do no money down. So to answer Al's question, if you're a veteran, it's okay if you don't come up with your down payment. We just need you to be able to make the payments on the loan. Third loan conventional. Conventional can be as little as 3% down if you qualify as a first-time home buyer. Typically, it's gonna be anywhere from 5% on. So you can put 5%, 10%. A lot of people will hit you with that. Oh, I need 20%, right? You don't actually need 20% down to buy a house. Um, I'll tell you why in a second. But those are your big three FHA, VA, conventional. Okay. So if you if you can come up with three and a half percent down, and when we say percent, we're just talking about the sales price of the property. Okay, so for an example for you, if a house is three hundred thousand dollars and you're looking at three and a half percent, one percent is gonna be three thousand, right? So that's three six nine, that's your three percent, your half is fifteen hundred. So three and a half percent down of three hundred thousand would be ten thousand five hundred dollars. That's the amount of down payments you would need to purchase that home. Okay. You can do the percentages off of whatever sales price you're looking at. There's all sorts of mortgage calculators out there online that you can use. Just be careful when you are. One of the biggest things people miss is they do a mortgage calculator and they don't factor in what the actual down payment percentage they want to put down. So, you know, if you do do the ones online where you can just easily put in the numbers, they're they're automatically gonna go, oh, you're putting 20% down, you're putting 40% down. Like they're gonna make the payment look better than it actually is. So just be careful of that as you go through. Down payment is probably the biggest change of that metric, other than of course what your interest rate is gonna be. But today we're talking about down payment. Okay, so those are your down payment models. It's kind of what you're gonna focus on as you go through. Um, if you cannot get it all on your own, what are your options? Which I think was the essence of Al's question when he asked. And you can do a few different things. You could try to qualify for a down payment assistance program. There are many of these out there. Some of them are state specific, some of them are national, some of them depend on which lender or what bank you're using. Um, so these are questions that you're gonna have to ask a mortgage lender that you're working with or a few different ones. Hey, what do you have for down payment assistance? Okay, what this is is it's going to be a grant of some sort. You may have to, you know, take an online class or or you know, go through some sort of hours of education in order to receive this grant, but there are many of them out there. What this is going to do is it's going to grant you potentially up to 3.5%, sometimes up to 5% of your down payment will be gifted to you in order to purchase this property. Now, in all things, nothing in life, well, I shouldn't say nothing, most things in life are not free. Okay, so if you're getting a down payment assistance program, they're going to assist you. You're going to be able to get the funds to close. In most cases, your closing costs may be a little bit more. Your interest rate might be slightly higher. Because basically, what you're going to do is you're going to end up paying that money back generally over the lifetime of the loan that you're getting. So is down payment assistance worth it? Uh, if you need the money, yes, absolutely it can be. If you can do it with all of your own funds, you're going to get a better deal in the long run because you're not borrowing from anybody. You're not getting money granted that you're, you know, paying back over time or whatever the case may be. In all things real estate, you have your own money, your own funds, your own down payment, you're going to get a better overall deal for monthly payment and everything else involved. So just keep that in mind. Down payment assistance is out there. Um, but I don't believe it's the right thing for everyone. So that's why we we do one-on-one consultations with all of our clients, and that's kind of the main reason why we want to figure out like what are their wants and need. Do you actually do you just want this money? I mean, hey, money's great, don't get me wrong. But what I want to know is like, do you need this money? And that may change how we factor in the deal. Okay, so another way for down payment is there's a lot of programs out there depending on what you do for a living. There's a teacher's program, there is a program for first responders, police, firefighter, medical. There is a culinary union program. Um, sometimes your, you know, unions, as far as like electrical workers, iron workers, different things like that may have loan programs as well. And then every now and then, um banks, you know, local, national, they'll come out with programs like, hey, you know, Nevada has uh a grant right now, they'll give you up to $20,000 to buy a house in these specific areas or these zip codes. And it's, you know, there's so much in the pool available. Um, when those come out, if you hear about those, you need to basically act immediately. Because as soon as you get the word of that news, so do thousands of other people. So a lot of times those are harder to catch on to because you have to qualify, get the funding, and close on the property in time before that funding runs out. So some of these have a time commitment on them, time period on them. Um, the ones that are a lot of times like state funded or or come from a particular location are sometimes a little bit more short term. The ones I talked about previously, as far as teachers, first responders, culinary, those are usually ongoing. So you can get some really good deals. Um, you know, those of you that are that are in those, you know, essentially the VA being part of the military offers the same thing. They'll allow you to do a loan for no money down. So, all of you who are who are veterans, thank you for your service. It is by far the best loan that you can possibly get. To be able to go and buy a house and not put any money down is amazing. It's fantastic. Those of you that do have a VA loan, I should probably do an up another episode just on this, but you can utilize that loan to start to buy multiple properties. And I I know we've helped people in the past who will be stationed here for a certain amount of time, buy a house, with the intent on in three to four years, when they get restationed, they're now going to turn that into a rental property. And they'll just flip that over and over and over again. And at the end of your career, you can end up with five or six houses, one that you live in and the others that you're renting out. Okay. Um, last on down payment, and then we're gonna switch over a little bit to the investment side since I just mentioned it. You can get your down payment gifted. Okay. A lot of times that this gift must come from uh an immediate family member. So, you know, your your second cousin's brother's uncle uh probably can't source and fund your entire down payment. However, your mom and dad, um, somebody in your immediate family, brother, sister, uh, son, whatever the case may be, may be able to contribute to the funds for your down payment. Okay, so um just as an example for you, I've told I've told this story before, but it it works in this case. Um, Emily bought her first home, and her and I were not married yet, and her parents were on the loan with her and gifted the down payment, and that's how we bought our first house. So there are options. Let's say you've saved, you know, you've done everything you possibly can and you've saved up seven, eight thousand dollars, but you need ten thousand five hundred for three and a half percent down. Is there anyone in your life you can go to and say, hey, I've you know, I've I've built this whole thing. Um, is there any possible way that you could gift me $1,500? This is the house I want to buy, and I'll make a deal with you to pay it back after the fact. Okay. There's nothing in there that's gonna allow you to pay them back out through the house in the in the end of this, so you're gonna have to come up with a payment plan for that person, or maybe they just love you enough to simply gift it to you. But that is an option. You can definitely have your down payment gifted to you. Um, so those are most of the ways to source down payment. So just to kind of reiterate one is to save, save your own money, come to the table, and utilize one of the loan programs we talked about. Number two, find some sort of assistance program or a program that works with the career field that you're in. Those are the other options. Option three, have it gifted, right? And this could be a full gift, it could be a partial gift. Um, you know, talk to your your mortgage lender to figure out if gifting is an option and up to how much and different loan programs. I don't want to go too far into it because as soon as I tell you, they'll change it. We always love to do that. Same thing with taxes, right? Like as soon as you get your tax code in order the next year, they're like, oh, oh, nope, we're gonna only give 50% of that now. Um, so I don't like to go too much in specifics just because my my license is in real estate, it's not in mortgage lending. Um, but those are the ways to source uh down payment for you. All right, now on the flip side of this, let's say you want to buy an investment property. It depends on the type of property, but in most cases, you are gonna want to probably have to put down at least 10% minimum on an investment purchase. This is a purchase where at the beginning you're not going to live there. It's specifically just for investment purchase, it's not gonna be a primary residence. And so most banks, lenders, they're going to make you put down a larger sum of money for down payment. In almost all cases, there is no availability here to get assistance, right? This is a like, you've got to have the money to do this. Okay. Um, so in investing, the the best deals that you're gonna get are at 20 to 25% down. In fact, depending on what type of property, if it's like a condo or a townhouse or anything shared or high rise, you may be mandated to put 25% down in those cases. But it we we really are probably starting at around 10 minimum, and then most lenders are definitely gonna want you to have 20% down in order to buy an investment property. You're gonna pay higher rates. So just notice that as well. Your investment rate is not your primary residence rate. So, you know, ask us if you have any questions on that. But for investment purchases, you are gonna have to have a larger sum of down payment, which really goes into your benefit in the long run, anyways, because if you're only buying this property to rent it out and you have to carry a mortgage, you're gonna want to make sure that the rent is going to hopefully at least cover the mortgage for you. So that way the debt can be paid down over time and the tenant can help you pay it off, right? That's the that's the game that we're playing in this case. So um on investment side, you'll need a little bit more money. Um, but for what you're buying it for, you're gonna have to have more skin in the game, anyways. Okay. That is pretty much all the ways to source uh down payment for you. The biggest lesson in this, honestly, is start earlier than you think. Pick a certain amount of money that you're gonna save every month, start a fund, a different account, something you don't touch, and just start to put money in it. And start saving for yourself, right? Um, two, I always say two is always better than one. Meaning, like if you can buy a home with a spouse or significant other, it's a heck of a lot easier than trying to do it on your own because two incomes is greater than one income. So the kind of like a life hack for you. I'm not telling you you all you have to go out and you know pick somebody and get married necessarily. But um, you can do a lot more collectively than you can on your own. So just think about that. And that goes along with the gifting too, just having a plan set in motion to then carry out and be able to navigate that for yourself. Um, on your down payment assistance programs, if you're going to take money or get a grant, just make sure you're aware of how long you have to live in that home. Okay, some of them will have stipulations, meaning that if I took down payment assistance on this property, there may be a penalty if I sell it before five years or 10 years. Okay, so yeah, I'm gonna take this money and I need it to buy this house, but like what are the long-term effects of that? How can it affect you negatively in three to five years if you now want to sell this house and move to something else? Maybe it makes more sense to wait a few months, save the money on your own, so that you have the ability to trade, buy, sell whatever you want to do on your own time rather than on somebody else's. So this is what I mean by like nothing is free. The money may be free at the time, but you're not free and clear to do anything you want to do in most of these cases. You probably will have some stipulations. So make sure that you ask what those are because I've had people who have gotten down payment assistance and then two years later they want to sell that house and they realize that they have to pay back the entirety of the grant that was given to them if they decide to sell. And that could be a difference of you know, $10,000. Could be a lot of money. So we want to be very aware of what we're signing up for and what we're doing, who we're listening to, um, what advice we're taking. Um, so let's just, you know, be careful and and make sure that we know all of the avenues we can go down before we decide that yes, that's the best one for me. We want to work with people who are going to give us multiple options and then we can weigh the balances of those and then choose what to move forward with. So that's kind of how we like to operate it is just what are the options, what's what works specifically for you, and then we can walk you down the road that that leads to that. And sometimes that is down payment assistance, right? Sometimes it's a gift, and sometimes it's waiting six more months so you can save up the funds on your own and doing everything in your own time and making your own decisions. So hopefully that helps. Um, some down payment sourcing information for you. Uh, if you um guys have any specific questions or you're thinking, like, hey, you know, that doesn't work for me because I make money this way, or you know, somebody else told me blah blah, you know, this and um what you said doesn't add up. Why is that? Uh just let us know. You know, feel free to reach out. We give free consultations for all of our buyers. We want to make sure that you know the entire process before you get started. Um, so you can do one of two things. Um, you can always reach out to us uh via phone. Our phone number will be listed below. And uh you can always email info at powersre.com and we will answer any specific questions that you have. And uh happy saving. Let's save for that down payment, whether primary or investment. And we will see you on the next episode. Thanks, guys.