6.3. Alternatives to Paying 20 Percent Down

If you don't have 20 percent to pay up front, you're not necessarily condemned to a lifetime of renting. Although it's tougher now to qualify for a loan with less than 20 percent down, you still have options.

6.3.1. Low Down Payment Loans

During the housing boom of the mid-2000s, nearly a third of all first-time homebuyers paid little or nothing down to buy their homes. In the housing and financial crises that followed, these loans virtually disappeared. That's not surprising: When home values slid, so did the equity in those homes. Many homeowners who'd recently bought a house with little or no money down found that they owed more than their homes were worth (they had negative equity in the home, in other words). Defaults and foreclosures spiked, and lenders were saddled with properties worth less than what they had invested in them. A lower down payment means a riskier loan, and going into the second decade of the 21st century, lenders are less willing to take those kinds of risks. You can still find low down payment loans, but you'll probably have to look around to find one that works for you.