Think you need 20% down to buy a home in Roanoke? You have more options than you might think. Between low down payment loans, state assistance, and gift funds, you can often get into a home with far less cash up front. This guide breaks down your choices, how they work, and how to pick the best fit for your budget and goals. Let’s dive in.
Your main down payment paths
- Conventional loans with 3% down for eligible buyers
- FHA loans with 3.5% down and flexible credit
- VA loans with 0% down for eligible service members and veterans
- USDA loans with no down payment in eligible areas
- Virginia Housing down payment assistance that can reduce cash to close
- Gift funds, employer help, and nonprofit programs
Conventional 3% down: flexible and cancellable PMI
Conventional loans offer as little as 3% down through programs like Fannie Mae HomeReady and Freddie Mac Home Possible for eligible buyers. These programs often include income limits, and lenders typically look for stronger credit than FHA. You will pay private mortgage insurance if your down payment is under 20 percent, but it can be removed once you reach an approved equity level.
- Learn more about HomeReady from Fannie Mae on the HomeReady product page: Fannie Mae HomeReady
- Review the Home Possible program at Freddie Mac: Freddie Mac Home Possible
Pros
- Low down payment with competitive rates for strong credit
- PMI can be canceled as you build equity
- Broad property and occupancy flexibility
Cons
- Stricter credit and debt-to-income standards than FHA
- Income limits may apply for the 3% options
What you will need
- Lender preapproval, recent pay stubs and W-2s or tax returns
- Two months of bank statements to verify funds
- If using a gift, a gift letter and proof of transfer
FHA 3.5% down: easier credit, stricter property rules
FHA loans require 3.5% down for most buyers who meet FHA guidelines. Credit standards are more flexible than many conventional programs, which helps if you are rebuilding credit or have limited history. FHA also allows generous use of gifts for the entire down payment.
- Review FHA mortgage insurance basics at HUD: HUD mortgage insurance premiums
Pros
- More flexible credit and history standards
- Gift funds widely accepted from family for the down payment
Cons
- Upfront and annual mortgage insurance, which can last for the life of the loan unless you refinance
- FHA appraisals may require repairs before closing
What you will need
- Standard income and asset documentation
- FHA-compliant appraisal and property condition
- Upfront mortgage insurance premium, which can be financed
VA 0% down: powerful for eligible buyers
VA loans allow eligible veterans, active duty service members, certain reservists, and some surviving spouses to buy with no down payment. There is no monthly mortgage insurance. A one-time VA funding fee applies in most cases and can be financed. Some borrowers with service-connected disabilities may have this fee waived.
- Check eligibility and request your COE: VA Certificate of Eligibility
Pros
- 0% down with no monthly PMI
- Competitive interest rates and generous seller concession limits
Cons
- VA appraisal and property condition standards can require repairs
- Funding fee adds cost unless waived
What you will need
- Certificate of Eligibility and lender preapproval
- Standard income and asset documentation
- VA appraisal and property acceptance
USDA loans: location and income limits apply
USDA loans can offer no down payment in eligible rural or semi-rural areas. Eligibility depends on the property address and household income. Some addresses near Roanoke may qualify, while others within city areas may not.
- Confirm whether a property address is eligible: USDA property eligibility map
Pros
- No down payment with generally low mortgage insurance costs
- Attractive option if the property and income qualify
Cons
- Strict area and income limits
- Not available for many in-town Roanoke neighborhoods
Virginia Housing assistance: down payment help
Virginia Housing (formerly VHDA) offers down payment assistance in the form of grants or second mortgages that can cover part of your down payment and closing costs. Programs often pair with Virginia Housing first mortgages but may work with other loan types depending on current rules. Income and purchase price limits typically apply, and availability can change.
- Explore programs and requirements: Virginia Housing homebuyer assistance
How DPA pairs with your loan
- DPA can be combined with conventional, FHA, VA, or USDA in some cases
- Some assistance is forgivable over time, while other options are deferred or repayable
- Homebuyer education is often required, and timing adds steps to your loan process
What to expect
- Extra paperwork and coordination with your lender
- Verification of income and purchase price against program limits
- A certificate of completion if education is required
Gift funds, employer help, and nonprofits
Gift funds from family are allowed by most loan types with proper documentation. Your lender will need a gift letter and proof of transfer. Employer relocation or homebuyer benefits and nonprofit programs may also offer grants or forgivable loans, but underwriting and documentation apply.
- FHA allows gift funds for the entire down payment
- Conventional, VA, and USDA allow gifts with acceptable sources and proof
- Sellers can often help with closing costs within program limits, but not all loans allow sellers to fund your minimum required down payment
What lenders verify for your down payment
Lenders must confirm where your funds come from. Expect to provide two months of bank statements, gift letters if applicable, and proof of any transfers. If you are using retirement account withdrawals, be ready to show the transaction and any tax documentation. Appraisals must also meet program rules. FHA and VA appraisals include minimum property standards that can trigger repair requests, while conventional appraisals focus more on value and basic habitability.
Costs to compare: PMI, MIP, and funding fee
- Conventional PMI is required when you put less than 20% down and can be removed once you reach an approved equity threshold
- FHA mortgage insurance includes an upfront premium and a monthly premium that often lasts for the full loan term unless you refinance
- VA has no monthly PMI, but there is a one-time funding fee that is sometimes waived
Lower down payments reduce your cash at closing but usually raise your monthly payment and total interest over time. If you start with FHA or a conventional loan with PMI, you can consider refinancing later to reduce or remove mortgage insurance when equity and rates make sense. If you use DPA, ask how the second lien affects future refinancing or sale.
Local tips for Roanoke buyers
Roanoke and the Roanoke Valley include many older homes. If you use FHA or VA financing, budget for potential repair negotiations that can come from appraisal findings. In a low-inventory or multiple-offer market, clear communication about your financing and any assistance timelines helps your offer stand out.
Confirm current loan limits for the area using the FHFA resource, then talk with your lender about how that affects your budget. For reference, see the FHFA page on conforming loan limits: FHFA conforming loan limits.
A simple plan to choose your path
- Get preapproved and review quotes. Ask your lender to price at least two options side by side, such as conventional 3% and FHA 3.5%, or VA if eligible.
- Check assistance eligibility. See whether Virginia Housing DPA or a nonprofit program fits your income and purchase price.
- Decide on your cash target. Balance your desired cash to close with your comfort on monthly payments and mortgage insurance.
- Confirm documentation. Gather bank statements, pay stubs, and any gift letters early to avoid delays.
- Align your offer strategy. If you plan to use DPA or a program with extra steps, build the timeline into your contract strategy and stay in close contact with your lender.
Ready to map the best route for your Roanoke purchase? We will walk you through options, timelines, and offer strategy so you can buy with confidence. If you are considering a move in the Roanoke Valley, reach out to Alexandra Taylor for clear guidance tailored to your goals.
FAQs
Can I use gift funds for a 3% conventional down payment in Roanoke?
- Yes. Most conventional programs allow gifts with a lender-required gift letter and proof of transfer, and some investors may require a small borrower contribution.
Which down payment option usually has the lowest monthly payment?
- It depends on rates and credit. VA often delivers low monthly payments because there is no PMI, but your exact payment depends on your rate, fees, and insurance.
Will Virginia Housing down payment assistance raise my interest rate?
- Some DPA options pair with standard-rate first mortgages. The assistance may be a low or no-interest second. Review the specific program terms with your lender.
Can I remove FHA mortgage insurance later if I put 3.5% down?
- FHA mortgage insurance often stays for the life of the loan. Many buyers remove it by refinancing into a conventional loan when equity and rates align.
How do I prove I qualify for a VA loan if I buy in Roanoke?
- Your lender will obtain your VA Certificate of Eligibility. You can also review eligibility requirements on the VA site and request your COE online.
Are USDA no-down-payment loans available inside Roanoke city limits?
- Eligibility depends on the property address and household income. Use the USDA map to check a specific address and confirm with your lender.
Does Virginia offer a first-time buyer tax credit I can use in Roanoke?
- Virginia does not offer a broad recurring first-time buyer tax credit. Some areas may offer Mortgage Credit Certificates through housing agencies, so check availability.
