Which loan type generally requires a lower down payment?

FHA loans are designed to make homeownership more accessible, especially for first-time buyers or those with less-than-perfect credit. One of the key features of FHA loans is that they allow for significantly lower down payment requirements, often as low as 3.5% of the purchase price. This lower barrier to entry can be a crucial benefit for borrowers who may struggle to save a substantial sum for a conventional or investment loan.

In contrast, conventional loans typically require a higher down payment, often around 5% to 20% of the home price, which can be a significant hurdle for many buyers. VA loans, while they also offer beneficial terms, including no down payment for qualified veterans, do come with certain eligibility requirements that may not apply to all borrowers. Investment property loans generally necessitate a larger down payment due to the increased risk associated with non-owner-occupied properties. Thus, FHA loans stand out for their lower down payment requirements.