Buyers in Glen Allen, Short Pump, and across Henrico often ask for the best loan type for low down payment. The honest answer depends on service history, credit, income, and price point, and the smallest down payment is not automatically the cheapest loan. You do not need 20% down to buy here. Duane Buziak is a mortgage broker in Glen Allen who has been helping families find their new homes since 2014, and he works through seven strategies for matching a low-down-payment program to your situation. Some terms you will see: LTV (loan-to-value) is your loan balance divided by the home’s value, so a 3% down payment means a 97% LTV. PMI and MIP are the mortgage insurance premiums on conventional and FHA loans. The first strategy is where every search should start.
Written by Duane Buziak, NMLS #1110647 | Coast2Coast Mortgage LLC NMLS #376205
1. Start with your eligibility, not the loan name
Each low-down-payment program has gates: military service, credit score, debt-to-income ratio (DTI, your monthly debts divided by gross monthly income), property type, and available cash. Compare rates on a program you cannot qualify for and you have wasted a week and anchored yourself to a number you cannot get.
For example, imagine a Glen Allen couple where one spouse is a veteran. VA eligibility removes the down payment question entirely, so they price VA first. Their neighbor, a buyer with no service history and a 660 score, skips VA and goes straight to FHA versus conventional 3% down. Same street, different shortlist.
To screen yourself:
- Write down your credit score range, your DTI, and your service status (active, veteran, surviving spouse, or none).
- Note the target property: single-family home, townhome, or condo, and whether it sits in a Twin Hickory or Wyndham-style community with an HOA that affects approval.
- Total your available cash for down payment, closing costs, and reserves.
- Request a soft-pull pre-qualification, which does not affect your credit, to confirm which programs are open.
The common mistake is shopping rates before doing this. Another is assuming 0% down is open to everyone; it is not. As a reference point, HUD’s FHA loan page sets the FHA score and down payment thresholds, and you can check your standing against them before any quote.
Measure success by how many programs you cut down to two or three realistic options before anyone quotes you a rate.
2. Use a VA loan for 0% down if you qualify
VA loans allow 100% financing and carry no monthly mortgage insurance. In exchange there is a one-time VA funding fee, which can be financed into the loan. Removing monthly MI is the reason VA often beats FHA and conventional on payment, not just on cash needed upfront.
For example, imagine a $400,000 purchase near Lakeside with 0% down. At the first-use, no-down-payment funding fee of 2.15% (as of 2026; verify the current percentage on the VA funding fee page), the fee is $8,600 and the financed loan is $408,600. At an illustrative 6.25% rate over 30 years, principal and interest is about $2,516 a month. An FHA loan on the same home with 3.5% down ($14,000) comes to roughly $2,595 for principal, interest, and MIP at the same rate. The VA loan needs $14,000 less cash and costs less each month.
To put it into practice:
- Request your Certificate of Eligibility through VA.gov, or have Duane Buziak pull it for you.
- Confirm your entitlement and whether you are exempt from the funding fee, as some veterans with service-connected disability compensation are.
- Price the loan across several wholesale options, since rates and fees vary by source.
The usual errors are overlooking the funding fee in the payment and assuming eligibility without the certificate in hand. Measure the monthly payment with the fee financed against an FHA or conventional alternative on the same home.
3. Use FHA for lower credit scores and 3.5% down
FHA loans are insured by the federal government, which is why credit standards are more flexible: a 580 score qualifies for 3.5% down, while scores from 500 to 579 generally need 10% down (per HUD). The trade-off is two mortgage insurance charges: an upfront premium of 1.75% of the base loan, usually financed, and an annual MIP of 0.55% on most 30-year loans with under 5% down, as of 2026 (verify on HUD.gov).
For example, imagine a buyer with a 640 score on a $350,000 home. With FHA, down is $12,250, the base loan is $337,750, and the financed upfront MIP of $5,911 brings the balance to about $343,661. At an illustrative 6.25%, principal and interest is about $2,116, plus roughly $155 a month in MIP, for $2,271. A conventional 3% down loan at that score might price at 6.75% with PMI near 1.75% of the loan per year: about $2,202 plus $495, or $2,697. FHA is about $426 a month lower. These are illustrative rates, not quotes.
The pitfall is the duration. With less than 10% down, FHA MIP generally lasts the life of the loan. Before you commit:
- Confirm your score and DTI fit FHA guidelines.
- Calculate both the upfront and annual MIP.
- Model a future refinance into a conventional loan once your equity approaches 20%.
Measure the full monthly payment including MIP, plus the approximate date a refinance would make sense.
4. Use conventional 3% down programs when credit is strong
Conventional loans sold to Fannie Mae and Freddie Mac allow 3% down for qualifying buyers, and private mortgage insurance (PMI) is priced by credit score. That is the mechanism that flips the comparison: at a 740 score PMI is a fraction of what a 660 score pays, and unlike FHA MIP, PMI can be removed.
For example, imagine the same $350,000 home with 3% down ($10,500) and a $339,500 loan. At a 740 score, an illustrative 6.25% rate and PMI near 0.55% gives principal and interest of about $2,090 plus $156 in PMI, or $2,246. FHA on that home is about $2,271. At a 660 score, an illustrative 6.5% and PMI near 1.3% gives about $2,146 plus $368, or $2,514. FHA wins at 660; conventional wins at 740. FHA is not always cheaper.
PMI is not permanent, either. Under federal law you can request cancellation when your balance reaches 80% of the original home value, and it terminates automatically at 78% (see the CFPB’s PMI explainer). Without appreciation, that takes a decade or more on a 30-year loan at 3% down.
To put it into practice, check HomeReady (Fannie Mae) and Home Possible (Freddie Mac) eligibility, including income limits, which are tied to area median income. Then get PMI quotes at your actual score and confirm the first-time buyer and education rules. Measure monthly PMI and the projected months until removal.
5. Run a worked cost comparison on a Henrico price point
Down payment size and monthly cost are different questions. Henrico County had 334,389 residents in the 2020 Census (Census QuickFacts), and prices vary widely between neighborhoods like Tuckahoe, Deep Run Park, and Dorey Park, so test the programs against one realistic home rather than a national average.
Suppose a $425,000 home, a 700 credit score, taxes and insurance assumed at $418 a month, and illustrative rates of 6.25% for FHA and VA and 6.50% for conventional. Closing costs and prepaids are assumed at $10,000 on all three. These are not quotes.
| Feature | FHA 3.5% down | Conventional 3% down | VA 0% down |
|---|---|---|---|
| Down payment | $14,875 | $12,750 | $0 |
| Starting LTV | 96.5% | 97% | 100% |
| Base loan | $410,125 | $412,250 | $425,000 |
| Financed upfront fee | $7,177 (1.75% MIP) | None | $9,138 (2.15% funding fee) |
| Total loan amount | $417,302 | $412,250 | $434,138 |
| Principal and interest | $2,569 | $2,606 | $2,673 |
| Monthly mortgage insurance | $188 (0.55% MIP) | $309 (0.90% PMI) | $0 |
| Taxes and insurance | $418 | $418 | $418 |
| Total monthly payment | $3,175 | $3,333 | $3,091 |
| Estimated cash to close | $24,875 | $22,750 | $10,000 |
VA is lowest in both monthly cost and cash needed, but only for eligible buyers. FHA beats conventional by $158 a month at this score, though FHA MIP stays while PMI can later drop off. Conventional’s edge appears at higher scores, as in strategy 4.
To build your own version: pick a realistic price, hold the rate assumptions constant, add taxes and insurance, calculate each payment, and set the results side by side. The mistake is comparing only down payments. Measure total monthly payment and cash to close for each option.
6. Layer in down payment assistance through Virginia Housing
Virginia Housing, the state housing finance agency, offers first-time buyer programs that can reduce the cash needed at closing. Terms change, so use the current Virginia Housing down payment assistance page for income limits, price limits, and structure rather than relying on a summary.
For example, suppose a first-time buyer in Henrico targets the $425,000 FHA scenario above, needing $24,875 to close. If a program provided $10,000 toward the down payment, cash needed would fall to $14,875. That figure is hypothetical, to show the math; the actual amount depends on the program in effect when you apply.
Before you rely on it:
- Review the income and purchase price limits for Henrico County.
- Confirm the homebuyer education requirement and schedule the course early.
- Ask whether the assistance is a grant, a deferred second loan, or a forgivable loan, and what repayment applies.
- Ask Duane Buziak whether the program is paired with a competitive rate, or whether a non-assisted loan would cost less overall.
The mistake is focusing on the cash saved and ignoring a higher rate or repayment term attached to it. A $10,000 benefit can disappear over a few years if the rate costs you $60 more a month. Measure the reduction in cash to close compared with the same loan without assistance, then compare the monthly payments.
7. Shop the same loan type across multiple wholesale options
A mortgage broker is not tied to one rate sheet. Duane Buziak can quote a single scenario to hundreds of wholesale lenders and compare the results, and a soft-pull pre-qualification lets you see options without a hard credit inquiry. Rate and fee differences on identical loans are real money.
For example, imagine a $350,000 home with 3% down conventional and a $339,500 loan. Source A quotes 6.5% with $4,200 in fees: principal and interest of $2,146. Source B quotes 6.25% with $5,100 in fees: $2,090. B saves about $56 a month, or $672 a year, but costs $900 more upfront, so the extra fees pay back in roughly 16 months. If you plan to stay longer than that, B wins. These are illustrative numbers.
To compare cleanly:
- Request a soft-pull pre-qualification from Henrico Mortgage by Duane Buziak.
- Ask for written quotes on the same scenario: same loan type, price, down payment, and credit assumption.
- Use the Dare to Compare challenge to check any written quote you already hold against what Henrico Mortgage by Duane Buziak can offer.
The common mistakes are accepting the first quote and letting several hard pulls spread across weeks. A note for Short Pump and Innsbrook buyers whose purchase exceeds the 2026 conforming limit of $832,750 (see the FAQ): jumbo and jumbo-adjacent scenarios are priced differently, so comparing sources matters even more. Measure the difference in rate, fees, and monthly payment between quotes.
Where to Start: The Order That Saves Henrico Buyers the Most Time
Check VA eligibility first, because 0% down with no monthly MI changes everything else. If you are not eligible, compare FHA against conventional 3% down using the monthly-payment table in strategy 5, with your actual score. Then, if you qualify as a first-time buyer, see whether Virginia Housing assistance lowers your cash to close without raising the cost of the loan. Finish by having the same scenario quoted from more than one source.
Your dream home in Henrico County is closer than you think. Discover exactly what you can afford with our credit-safe pre-qualification process that protects your score while unlocking your options. Get pre-qualified today and take the first step toward homeownership with a local mortgage expert who understands your community. You can also call Duane Buziak at 804-212-8663.