First-time home buyer guide: down payments, closing costs and choices
FHA 3.5%, conventional 5%, 10% or 20%, investors 25% — and closing costs near 3%. How to choose what fits.
Your down payment options
FHA: 3.5% down with flexible credit, plus mortgage insurance. Conventional: 5%, 10% or 20% down; at 20% you avoid private mortgage insurance. Investors should plan on 25% down.
Single-family or 2–4 units
A single-family home is the simplest first step. A 2–4 unit property lets you live in one unit and rent the others; lenders count 75% of the rent from up to three rental units, and that income must cover the full payment at a 1:1 ratio to qualify.
Always hire professional management
If you rent units, budget at least 8% of collected rent for a local management firm that knows tenant law, rent control and evictions. Self-management is not a plan.
Next step
Run your numbers in the free six-step analysis, then book an advisor review when the deal is real.
Run your own numbers
See your payment, take-home DTI, cash to close and six-month reserves.