Duane Buziak, NMLS #1110647, works with veterans, military families, and first-time buyers across the city of Richmond who assume a 20% down payment is the price of entry to homeownership. It isn’t. As of 2026, several federally backed and conforming loan programs allow buyers to purchase with 0% to 3.5% down, and the right choice depends on service history, credit profile, and how much cash is actually on hand. The strategies below walk through the specific paths available to Richmond-area buyers this year, what each one costs in practice, and where buyers commonly go wrong when they don’t compare programs before applying.
- 1. Use a VA Home Loan for 0% Down
- 2. Qualify for an FHA Loan With 3.5% Down
- 3. Explore Conventional Loans With 3% Down
- 4. Apply Gift Funds Toward the Down Payment
- 5. Negotiate Seller-Paid Closing Cost Credits
- 6. Get a Soft-Pull Pre-Approval Before You Shop
- 7. Strengthen Credit and DTI Before Applying
1. Use a VA Home Loan for 0% Down
A VA-backed loan lets eligible veterans, active-duty service members, and some surviving spouses finance a home with no down payment at all, according to VA.gov. There’s also no monthly private mortgage insurance, which is what separates a VA loan from every other low-down-payment option on this list. The tradeoff is a one-time funding fee, though that fee is waived for veterans with a service-connected disability rating on file with the VA.
Consider a Stafford County veteran with a Certificate of Eligibility who purchases at the area’s median home price with zero down. Because there’s no PMI stacked on top of principal and interest, the monthly payment is often lower than an FHA or Conventional loan at the same price point, even before accounting for the cash saved at closing.
To put this into practice:
- Confirm basic eligibility based on service length and discharge status.
- Request a Certificate of Eligibility directly through VA.gov.
- Get pre-approved to see your exact entitlement amount and resulting payment.
- Compare that payment against FHA and Conventional quotes for the same purchase price.
The common mistake is assuming VA loans require pristine credit, or assuming the funding fee exemption applies automatically. It doesn’t; the disability rating has to be documented and verified before closing, or the fee gets charged by default. Track whether the monthly payment stays comfortably within budget without PMI added, since that gap is usually the clearest sign the VA loan is working in the buyer’s favor.
2. Qualify for an FHA Loan With 3.5% Down
FHA financing opens the door to buyers who don’t have military eligibility but also don’t have a large cash cushion. Per HUD.gov, borrowers with a credit score of 580 or higher can qualify for a 3.5% down payment, well below the 20% many buyers assume is required.
Take a first-time buyer with a 600 credit score and limited savings. Rather than waiting a year or two to accumulate 10-20% down, that buyer can move forward now with 3.5% down and start building equity immediately instead of paying rent while saving.
Putting this into practice looks like:
- Verify credit score and debt-to-income ratio with a lender before shopping for homes.
- Document the source of the down payment, whether savings or gift funds.
- Apply once documentation is in order to avoid delays during underwriting.
The mistake buyers make with FHA is ignoring the mortgage insurance premium, or MIP. FHA charges an upfront MIP and an annual MIP that’s rolled into the monthly payment, and unlike Conventional PMI, it often doesn’t cancel once the loan reaches 20% equity. That raises the effective monthly cost over the life of the loan. To confirm FHA is the right fit, compare the total monthly payment including MIP against a Conventional 3%-down scenario at the same purchase price before signing anything.
3. Explore Conventional Loans With 3% Down
Fannie Mae and Freddie Mac both offer conforming loan programs that allow qualifying first-time buyers to put down as little as 3%, a figure confirmed through FHFA.gov guidance on conforming loan limits and eligibility. As of 2026, the conforming loan limit for the Richmond metro area is $832,750, which covers the vast majority of homes bought and sold across the city.
Picture a buyer with a 680+ credit score purchasing within that limit using a 3%-down Conventional loan. Because the buyer’s credit profile is stronger, the private mortgage insurance on this loan is often less expensive per month than FHA’s MIP would be on the same loan amount, even though the down payment percentage is similar.
To move forward with this strategy, confirm first-time buyer status and credit score with a lender first, then request a side-by-side comparison of Conventional PMI against FHA MIP for the identical loan amount and rate. The mistake here is assuming the two programs cost the same over time simply because the down payment percentages are close. They don’t: Conventional PMI cancels automatically once the loan reaches 20% equity, while FHA MIP frequently sticks around for the life of the loan unless refinanced out. Track equity growth month over month and flag the point where PMI is scheduled to drop off, since that’s the moment the payment meaningfully improves.
4. Apply Gift Funds Toward the Down Payment
FHA, VA, and Conventional loans all permit family members to gift money toward a buyer’s down payment, provided the gift is properly documented. This matters most for buyers who are otherwise qualified on income and credit but are short on the cash needed at closing.
Suppose a buyer’s parents gift a portion of the down payment. The lender will require a signed gift letter stating the funds don’t need to be repaid, along with the donor’s bank statement showing where the money came from. Once that paper trail is established, the gift counts toward the down payment just like the buyer’s own savings.
The process works best in this order:
- Obtain a signed gift letter from the donor early in the process.
- Collect the donor’s bank statement showing the funds’ origin.
- Route the transfer through a traceable method, such as a wire or documented check, well before closing.
- Provide both documents to the lender before the funds are needed for underwriting.
The most common mistake is depositing gift funds as cash, or shuffling money between accounts without a paper trail. Underwriters flag undocumented deposits almost every time, which can stall closing or force a buyer to source the funds from scratch. Once the gift is submitted, confirm underwriting accepts the documentation without additional conditions attached, since that’s the clearest sign the gift is fully cleared.
5. Negotiate Seller-Paid Closing Cost Credits
Closing costs typically run a few percent of the purchase price on top of the down payment, and that combination is often what strains a buyer’s cash reserves the most. Negotiating a seller credit toward closing costs frees up cash that can instead go toward the down payment itself, or simply reduce what the buyer needs to bring to the table.
For example, a buyer on a resale listing negotiates a seller credit that covers a meaningful share of closing costs, effectively freeing up several thousand dollars that would otherwise have come out of pocket. This is a negotiating point during the offer stage, not something added after the contract is signed.
To use this strategy effectively:
- Work with your real estate agent to build a seller-credit request into the initial offer.
- Confirm the requested credit amount stays within the contribution cap for the loan program being used, since VA, FHA, and Conventional loans each set different limits.
- Have the lender recalculate cash-to-close once the credit is agreed upon.
The mistake buyers make is asking for more than the program allows, which forces a renegotiation late in the transaction and can jeopardize the closing timeline. Before signing anything, confirm the final closing disclosure reflects the negotiated credit accurately, and that the resulting cash-to-close matches what was planned from the start.
6. Get a Soft-Pull Pre-Approval Before You Shop
Before touring a single home, it helps to know exactly which low-down-payment program actually applies to your situation. A soft-pull pre-approval, such as Duane Buziak’s NoTouch Credit Pull, produces real numbers across VA, FHA, and Conventional scenarios without a hard inquiry hitting your credit score.
Imagine a buyer who requests this comparison and sees, side by side, what the monthly payment looks like under each program at the same purchase price. That buyer can then shop with confidence, knowing which price range and program fits before ever writing an offer.
The process is straightforward:
- Request a soft-pull pre-approval before beginning your home search.
- Review the side-by-side program comparison across VA, FHA, and Conventional, where applicable.
- Shop strictly within the confirmed budget and program that fits your credit and service history.
The common mistake is house-hunting or making offers before this step, only to discover during underwriting that the buyer doesn’t actually qualify for the program they assumed. That mismatch can unwind an accepted offer. Once an offer is submitted, check that it matches the pre-approved program and payment range exactly, with no last-minute surprises on rate or program eligibility.
7. Strengthen Credit and DTI Before Applying
Credit score and debt-to-income ratio, or DTI, determine which programs a buyer qualifies for and what those programs cost. Improving both in the months leading up to an application can shift a buyer from one tier of financing into a better one, sometimes without changing the purchase price at all.
For instance, a buyer who pays down two credit cards over roughly 90 days might move from FHA eligibility into Conventional 3%-down territory, which often carries lower long-term insurance costs once equity builds. That shift alone can save meaningfully on the monthly payment over the life of the loan.
To work toward this:
- Pull a current credit report and identify which balances are driving the score down.
- Pay down revolving balances, prioritizing cards closest to their limits.
- Avoid opening new credit accounts or financing large purchases during this window.
- Recheck DTI with a lender before submitting a formal application.
The mistake that undoes this strategy is financing a car or opening a new card right before applying. Both raise DTI at exactly the wrong moment and can knock a buyer out of a lower down payment tier they were about to qualify for. Re-run pre-approval numbers after 60 to 90 days of these changes to confirm the score and DTI improvements actually translated into better loan terms, not just a better-looking credit report.
Worked Example: FHA vs. Conventional at the Richmond-Metro Price Point
Suppose a buyer purchases at a $375,000 price point, roughly in line with recent city-wide pricing trends reported by Zillow’s Richmond metro data. On an FHA loan with 3.5% down, the down payment is $13,125, leaving a base loan amount of $361,875. Add the FHA upfront MIP of 1.75%, financed into the loan, and the total loan amount rises to roughly $368,209. At an illustrative rate, principal and interest run approximately $2,340 per month, plus an annual MIP of about $258 per month, for a combined payment near $2,598 before taxes and insurance.
On a Conventional loan with 3% down for a qualifying first-time buyer, the down payment is $11,250, leaving a loan amount of $363,750. There’s no upfront premium financed into the loan. At the same illustrative rate, principal and interest run approximately $2,300 per month, and PMI on a stronger credit profile might add roughly $170 per month, for a combined payment near $2,470. That’s a monthly delta of about $128 in favor of the Conventional option in this scenario, and the PMI portion disappears entirely once the loan reaches 20% equity, while the FHA annual MIP typically does not. The right answer still depends on the buyer’s actual credit score and DTI, which is why running both scenarios before applying matters.
VA vs. FHA vs. Conventional at a Glance
| Feature | VA Loan | FHA Loan | Conventional Loan |
|---|---|---|---|
| Minimum Down Payment | 0% | 3.5% (580+ credit score) | 3% (qualifying first-time buyers) |
| Mortgage Insurance | None; one-time funding fee applies | Upfront + annual MIP, often for life of loan | Monthly PMI, cancels at 20% equity |
| Eligibility Basis | Service history via Certificate of Eligibility | Credit score and DTI | Credit score, DTI, first-time buyer status |
| 2026 Richmond-Metro Conforming Limit | Not capped the same way; entitlement-based | Set by HUD, varies by area | $832,750 per FHFA |
| Best Fit For | Eligible veterans and service members | Lower credit scores, limited savings | Stronger credit, wants PMI to cancel |
Frequently Asked Questions
Can I buy a home in Richmond with no down payment?
Yes, eligible veterans and active-duty service members can use a VA loan for 0% down, per VA.gov guidelines.
What credit score do I need for an FHA loan with 3.5% down?
HUD requires a minimum credit score of 580 to qualify for FHA’s 3.5% down payment option.
Is a Conventional 3%-down loan only for first-time buyers?
Most 3%-down Conventional programs are restricted to qualifying first-time buyers under Fannie Mae and Freddie Mac guidelines.
Do VA loans require mortgage insurance?
No, VA loans don’t carry monthly mortgage insurance, though a one-time funding fee typically applies unless waived.
Can family members give me money for my down payment?
Yes, gift funds are allowed on FHA, VA, and Conventional loans as long as they’re documented with a gift letter and bank statement.
How much can a seller contribute toward my closing costs?
Seller contribution caps vary by loan program, so the exact limit depends on whether you’re using VA, FHA, or Conventional financing.
What’s the difference between FHA MIP and Conventional PMI?
FHA’s MIP often lasts for the life of the loan, while Conventional PMI cancels automatically once you reach 20% equity.
What is the 2026 conforming loan limit for the Richmond metro area?
The 2026 conforming loan limit for the Richmond metro area is $832,750, according to FHFA.
This information is not intended to be an indication of loan qualification, loan approval or commitment to lend.
Veterans and active-duty buyers should start with the VA loan strategy first, since it removes the down payment question entirely and often produces the lowest monthly payment of any option covered here. Civilian buyers without VA eligibility are better served starting with a soft-pull pre-approval, so FHA and Conventional numbers can be compared side by side before any offer is written. Gift funds, seller credits, and credit repair aren’t standalone strategies so much as tools that make whichever base program you choose work harder, and most buyers end up combining two or three of them by the time they close.
Whether you’re a veteran ready to use your hard-earned benefits or a homebuyer exploring your financing options, your path to homeownership starts with expert guidance you can trust. Connect with Duane today for a personalized consultation and discover the mortgage solution tailored to your unique goals in the Stafford County and Richmond area.